Looking To Rebuild Your Credit Rating?Here’s How To…

A credit rating is an evaluation of the credit risk of a prospective debtor, predicting their ability to pay back the debt, and an implicit forecast of the likelihood of the debtor defaulting.

1. Figure out the key factors contributing to your credit rating

Your credit rating heavily depends on factors like;

  • Payment and credit history
  • Credit utilization- this is the percentage of your outstanding credit balances to your credit  limits. It measures the amount of available credit you are using. For example, if your balance is Ksh 5,000 and your credit limit is Ksh10,000, then your credit utilization for that credit card is 50%.
Photo by Oladimeji Ajegbile on Pexels.com

It is advised that you pay attention to your credit utilization percentage as a high ratio can reflect poorly on your credit score.

  • How old are your credit accounts
  • All your credit accounts combined

Any negative performance in any one of these key points may impact an adverse effect on your credit scores.

2. Get that report

Improving your credit rating without a credit report is like driving in a fog. Get all the facts right, that are up to date too. This report can be provided by a credit reference/rating bureau in your country. For Kenya, we have metropol corporation that gives a report at a fee.

Photo by Christina Morillo on Pexels.com

Having an up to date report allows you to have a full picture of your credit status it’s also important as it allows you to dispute any discrepancies with your credit.

3. Create a credit tracker

Once you have all your credit information with you, it’s important you create a tracker that allows you to track all your credit obligations. A tracker can be a simple spreadsheet or excel showing the following;

Nature of debtPending balancesPaid amountDefaulted amountIneterest charged

4. Re-negotiate your credit

Calculate what percentage of your debt you owe to each creditor. Divide your lump sum up among the creditors using those percentages. You can’t offer more than that amount for each creditor while negotiating.

You have the right to renegotiate your terms with your lender to a more flexible and workable payment plan. Do not sit in silence while you default your credit, have that conversation with your bank/ financial service provider.

Put your agreement in paper and have both parties sign yo the agreed terms. Don’t just have a phone call or a face to face visit with the trust that the person in charge will act in good faith get all the term in writing. If possible, have the exchange of conversation via email or text messages for future reference.

5. Commit to repayment

What most lenders want is commitment. No one wants to work with someone who least shows the commitment yo repay their credit.

Once you have renegotiated your credit terms, show some commitment by paying on time, the agreed amount.

Subscribe to our blog here for more insights on this and much more

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

Powered by WordPress.com.

Up ↑

%d bloggers like this: