How to Repair a Bad Credit Profile?

Is your bad credit profile preventing you from getting a home loan?

Having debt isn’t necessarily the cause, as many believe. The problem almost certainly lies with your credit profile. By addressing issues with your credit profile, you can improve and even fully repair it over time.

Credit Report

Pulling your free annual credit report from a reliable credit bureau is the only way to find out exactly what’s cooking with your credit profile. The National Credit Act (NCA) gives you access to one free credit report yearly. You can only do damage control, once you have inspected the aspects dragging your credit score down.

Payment History

The biggest issue is most likely your payment history, which is a record of the payments you’ve made over the last 2 years. In order to improve your credit profile, you need to bring all of your arrears up to date. Your payment history will reflect your arrears for up to 2 years. But, with just 3 to 6 months of timely payments, you will significantly improve your credit profile, score and report.

Judgments

If you have any judgments, these will show up on your credit profile – settle them first. You don’t have to apply for judgments to be rescinded anymore. The new Credit Act Amendment compels credit bureaux to remove judgment listings, once settled.

Default Listings

Bring accounts with default listings up to date or, even better, settle them. The only way to have default listings removed is to negotiate with your credit providers, otherwise your credit profile will retain these listings for up to a year. Judgments and default listings damage one’s credit score considerably.

Improve and Repair

You may think that settling all of your debts at once is the answer – it’s not. In so doing, you won’t improve your credit score at all. It’s best to build up a good payment history first, pull your credit report every month and, once you’ve improved your score, go ahead and apply for the bond.

Repairing or improving your credit profile may require a little patience. You will only see improvement after 3 months at least. Regardless, it will all be worth your while, when you get that home loan in the end.