Have you defaulted on a loan? Here’s a plan of action to help you get back on your feet if you have.
When you take out a loan, you generally don’t assume that you aren’t going to be able to pay it back. Unfortunately, this happens more often than you’d think, and once you default on repayments your credit score may start to drop significantly.
But a default doesn’t mean you have to give up on having a good credit score. Rebuilding a good credit record after a default is certainly possible, but it does take time. The key is to work hard for it, be patient, and even ask for help if you need it.
Check for inaccuracies on the report. Incorrect information can be disputed and removed.
Pay off the defaulted debt. In the long run, paying off the debt you’ve defaulted on should prevent more adverse information on your record. So, if you have defaulted, it’s still best to pay off the debt, even if you’re late.
Talk to your credit provider. Many people who have defaulted on an account often don’t contact their credit providers and start to ignore their calls. Rather, reach out to your credit provider and explain your situation; often, they are willing to negotiate a new payment plan.
Consider getting external help. Talk to a financial adviser who will be able to offer guidelines for getting your finances back on track.
Going under debt review will negatively affect your credit profile. It will reduce your score with the various credit bureaus, and you cannot legally take on any new debt while under review, so this is a step that should only be considered as a last resort.
Always check your full free credit report and score at Compuscan’s www.mycreditcheck.co.za. On your report, you can find your account payment history, balance and instalments as well as adverse credit information. This will give you a clear picture of your credit position, highlighting which areas you need to work on to get yourself back to a good credit record.