Room of Oran | Fix Your Credit Score | Business
QUESTION: I’m having trouble getting credit due to long standing bad credit that I just settled with the bank. I took out a loan in 2007 and was also offered a credit card – my wife and I. There was a medical issue in my family, and I took out the loan to help out and used some of the money to pay off the people I owed for my wedding. I used to repay the loan well until I lost my job. My wife was cultivating with her family, so we had big problems. I stayed in contact with the bank but was told I had to find a way because the interest was accumulating and it had become a bad debt.
I got a visa and went to America to find work, but most of the time it was just day to day, so I sent home what I had. I have a better job now. After negotiating with the collection agency, they gave me an amount and I paid it in February 2018. I really want to buy a house, but I can’t get a loan from any financial institution because of my rating. credit. I kindly ask for your advice on how to fix it. I really need help and I just want to start my life over.
-Rowe
FINANCIAL ADVISOR: You may be able to recover from your current position, but I doubt that will happen overnight. The good thing about your situation is that even though you had a bad experience, you took a sensible approach.
In my old-fashioned way of life, I’m surprised how much people go into debt to fund their weddings. One of the risks of borrowing money is the likelihood that the borrower’s ability to repay debt will change, as has happened to you when your employment status changed.
It is commendable that you stayed in touch with the bank and made efforts to find a job to fulfill your obligations. Even so, you should be happy to have taken the burden of the debt itself off your shoulders. But you still live with the consequences of the challenges you had to overcome to pay off the debt.
I hope other readers will learn from your experience. Although you did not specify how much the credit card contributed to your problems, credit cards should be avoided whenever possible. They are very convenient, but they lead to troublesome consequences.
Note that although you acted responsibly by being in contact with the bank, it did not prevent the interest from accumulating, the bankers want to collect what is owed to them.
So how do you progress from here? Any information about you that reaches the credit bureaus remains for seven years, so your past affects your credit score for a long time. Fortunately, you have paid off your debt, which will positively affect your score.
Credit information providers such as financial institutions are required to provide monthly updates on their customers to the credit bureaus, so your upgraded status will be reflected in reports if there are no updates. other negative developments.
I suggest you request a report from a credit bureau. You are entitled to one free report each calendar year, but you must pay $15,000 plus GCT for each additional report.
Incidentally, and I don’t know how widespread this is, a representative from the microcredit unit of a financial institution informed me that they lend on a case-by-case basis to people with problematic credit histories. They normally require applicants to explain how their situation arose and to participate in a social performance management program for delinquents and new borrowers. Participants are certified at the end of the program.
This does not mean that you would be able to borrow all the money you want, as the lender may choose to lend a small amount initially.
That wouldn’t help you buy a house, and that in itself requires more than ability to pay, as you should be able to afford the down payment and closing costs.
It’s a major setback for you, but it’s not the end. Try to save as much as possible to reduce the need to borrow.
– Oran A. Hall, lead author of “The Handbook of Personal Financial Planning,” offers tips and advice on personal financial planning. [email protected]