For one to be successful in the diaspora, one has to adapt, learn and overcome many challenges, and do it fast. One of the major challenges Kenyans in diaspora face is learning and navigating the financial system, especially in understanding what a CREDIT SCORE is and also, what things make it good and what makes it bad.
A bad credit score means that you either do not get loans, credit cards, or if you do, you get them at very high interest rates. There are many suffering with bad credit score and do not know, what is making their Credit Score bad in the first place.
Granted, there are many other things that we do that mess up our credit scores. However, these three mistakes have the greatest impact on your credit score and are also the most common reasons why many people have bad Credit Scores. They are:-
1) ALWAYS MAKING LATE PAYMENTS:
If the due date on your credit card, car loan, personal loan is on let us say the 5th of every month, and you never make your payments either ON the due date or BEFORE the DUE DATE, then this will lower your credit score. So if possible, make sure you pay on time, or renegotiate the due date with the loan company. This also helps avoid late fees which are charged to you every time you are late on your payment.
2) MISSING PAYMENTS OR NOT MAKING REGULAR PAYMENTS:
There are times when we get overwhelmed by the various financial responsibilities that we have. This means that there may be times when we either forget to make a payment, or just cannot make a payment due to various reasons. However, missing to make a payment, ADVERSELY affects your credit score. It is important to have a budget and to stick with that budget so as not to get side tracked by the many other things in our lives and forget to miss payments. It would also be helpful to you, if you could contact your loan company and organize with them how you are going to get current on your account with them.
Check out my video on 5 REASONS WHY YOU SHOULD BUDGET by following this link here
3) NOT MAKING ANY PAYMENTS AT ALL:
There are times when, due to job losses, emergencies, unfortunate events or poor financial management skills, one finds themselves just frustrated with all the bills that need to be paid, and sometimes, they just give up or not care at all. There are many people who have had their cars repossessed, house auctioned upon, due non payment of their financial commitments. The thing is, there are not files that ‘disappear’, there is not time your slate is wiped clean. Your credit report has a record of all the debt your have owed, how you have made your payments, what is outstanding, what has gone to the debt collectors, your repossessions.
There is only one way that all this can be fixed and it is by getting back on a payment plan to reduce your debt. It is important for your to take that first step and call the companies that you owe money to, and tell them the plan that can work for you, and come to a compromise with them.
To have a better understanding on what information is on a CREDIT REPORT, check out my video on UNDERSTANDING YOUR CREDIT REPORT by following this link here:
Watch this video that further explains the 3 Major mistakes that mess up your credit score.