Finding yourself in a position of bad credit can happen to the best of us. Whether you have fallen into bad credit through bad financial planning, or simply bad fortune, it’s important to recognise your financial position in order to get back into control. Getting out of a position of bad credit takes time and requires a commitment on your behalf. You need to be open to changing your financial habits in order to take back control of your finances. So, how long does it take to clear bad credit?
What Is Bad Credit?
Before we take a look at how long does it take to clear bad credit, let’s take a look at what bad credit is. Everyone has a credit score. This is a number you are given from 0 to a potential 1200 based on your borrowing history. Anything below 550 is considered a low credit score and can make it much harder for you to take out a future loan. Lenders look at your credit score to determine your reliability as a borrower and whether or not they should take a risk on you. Bad credit makes this much less likely.
There are a number of factors that contribute to your credit score. These include:
- Credit history: a long credit history works in your favour showing you have borrowed from a number of lenders over the years and successfully repaid loans.
- Repayment history: if you have missed repayments, this will result in a negative listing on your file.
- Loan defaults: likewise, defaulting on a loan will reflect poorly on your credit score.
- Credit type: the more types of credit you have the better. It shows diversity in the types of loans you have managed.
- Court judgements & bankruptcy: both these will have a big impact on your credit score and prevent you from taking out future loans.
The credit repair steps
If you are looking to fix bad credit, then here are the steps you need to take:
- Check your credit score: it’s important to know where you have received black marks against your name that have left you with a low credit score. Did you miss repayments? Did you default on debts altogether? Knowing this vital information will help you rectify it. Of course, if you see a negative listing on your file that doesn’t seem right, you should always seek to have it removed.
- Repair your credit score: Credit repair is a very real and effective solution to help wipe your credit file clean. Rather than waiting years for your negative credit listings to disappear from your credit report, you can pay professional credit repair experts to clear your credit score for you. Credit repair can take as little as 30 days and is inexpensive if you take into account the amount you could save on interest rates and fees with a better credit rating. We recommend getting touch with Clean Credit if you are considering credit repair.
- Set up a regular payment schedule: the next step is to make sure you pay your bills. If you are unable to meet your repayments, then it is worth exploring your options. You may look at debt consolidation and bringing in all your loans into the one debt, so it’s much easier for you to manage a repay. Another option is entering into a debt management plan with your creditors, to help you manage those payments.
- Pay off the debt: one of the easiest ways to get yourself out of bad credit is to pay the debt! Go back and work out your budget and what you can afford and put together a plan. If you are over 60 days late paying off a loan of more than $150, this will stay on your credit report for 5 years, unless you go through the process of credit repair.
- Get financial help: if you are still struggling to make ends meet and pay off your bills, it is time to look for help. You can go to family and friends and ask for their help, or go down the path of financial counselling to get you on track. Alternatively, you can still get loans if you have bad credit. Get in touch with our team today and we could help you to get the funding you require.
How Long Does It Take To Clear Bad Credit?
Determining how long does it take to clear bad credit depends on your current financial position and your ability to make changes and pay off the debt. This will be different for everyone. Different listings on your credit file will stick around for longer than others.
This article explains in depth how long bad credit can stay on your file for. But you can expect:
- Defaults can last up to 5 years
- Court Judgments can last up to 5 years
- Black Marks can last up to 7 years
- Hard Credit Enquiries can last up to 2 years
You can go through your credit report and work out how long until the negative listings will be on your file. As long as you make plans to change your financial position, you should find yourself out of a position of bad credit on this date.
Clearing Your Bad Credit
Now you know long does it take to clear bad credit, you might be looking for a little help to get you there. The team at Bad Credit Loans can help you to get finance, even if you’ve been rejected by other lenders.