Here’s a comprehensive guide on how to clear bad credit history in the Philippines:
Understanding Bad Credit
In the Philippines, your credit history is reflected in your credit report issued by the Credit Information Corporation (CIC). A bad credit history typically results from:
- Late or Missed Payments: Consistently paying late or skipping payments altogether.
- High Credit Utilization: Maxing out your credit cards or maintaining large balances.
- Defaulting on Loans: Failing to repay loans on time or not repaying at all.
- Co-signing or Guaranteeing Loans: When the primary borrower defaults.
Steps to Clear Bad Credit History in the Philippines
While completely erasing a bad credit history isn’t possible, you can significantly improve it over time:
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Obtain Your Credit Report: Get a copy of your CIC credit report for free (https://www.creditinfo.gov.ph/getting-your-credit-report-credit-score). Review it for errors and dispute any inaccuracies.
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Settle Outstanding Debts: Prioritize paying off any past-due loans or balances. Contact your creditors to negotiate manageable payment plans or see if they offer settlement options.
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Build Positive Credit Behavior: From here on, it’s about demonstrating responsible credit usage:
- Pay Bills on Time: Make all loan and credit card payments on or before their due dates.
- Keep Credit Utilization Low: Maintain balances below 30% of your credit limits on credit cards.
- Consider a Secured Credit Card: If you have trouble getting approved for a traditional credit card, a secured option helps build credit.
- Limit Credit Applications: Too many inquiries in a short period can hurt your score.
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Be Patient: It takes time to rebuild credit. Continue good practices consistently, and your score will improve gradually.
Important Notes:
- Dispute Errors: If you find incorrect information on your credit report, file a dispute with the CIC through their Online Dispute Resolution Process (ODRP).
- Avoid Credit Repair Services: Be wary of companies promising to “fix” your credit for a fee.
- No Quick Fixes: There’s no fast way to completely remove a negative credit history.
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