It is extremely important to keep all your credit payments cleared. For this to take place, you will have to pay all your debts, loans and bills on time. If you fail to make the payment on time, the authorities give you a 60 day limit to correct the error. However, if at the end of those 60 days you still fail to come up with the required amount, the provider may dub you default. This will have an adverse effect on your credit score, causing it to drop significantly and destroying your reputation and reliability in the eyes of future lenders.
What is a credit score?
The credit score is the measure of your reliability with money. It shows how much importance you give to making due payments and clearing credit history. A poor record is a massive setback to the career of a person and of course his future dealings. Every time a payment goes over due, it gets mentioned in the negatives section of your credit report and your credit score drops drastically.
Why is Credit Default dangerous?
Credit default is not a very nice thing to bump into because of the danger it imposes on your reputation. It harms the reputation severely by decreasing your credit score so if the lenders take a peek into your credit score and see that it is low, they will assume that you are not reliable enough to be trusted with money. The following are the common hazards that usually follow:
1. Banks definitely go through your credit score and credit history. One very easy way to do that is to check your utility bills or leaf through your credit card balance. If there are many other dues and the imbalance between card limit and balance, you are likely to suffer a refusal to receive bank personal loans. Even if the bank decides to lend you the sum, the interest rates will be ridiculously high; the higher the rate of credit default, higher will be the interest rates. The same applies to instant cash loans borrowed from private financiers and payday lenders.
2. Job providers, especially the big multinational companies whose reputation is very sensitive and important to maintain, do not associate themselves with people with poor credit record. So, if you want to get a decent job in a well established firm or company, you need to have a clean credit history making you appear a trustworthy gentleman.
3. In addition to the high interest rate that gets applied to your loans, you are doomed to pay a much larger sum on the purchase of a piece of property as well. Besides, the owner will refuse to grant you the pleasure of splitting the sum in small parts and paying it as installments.
How can Credit Default be corrected?
All you have to do to get rid of this black stamp across your face is to contact the dealer and come to a monetary agreement with him. Make sure you get this agreement in writing before proceeding further. Ask him to shift the ‘overdue’ penalty on your credit report to ‘paid’ after the transaction is made. This will clear your credit history and help you raise your score if you work consistently hard to improve it.