What to do when credit score disappears?

20-Jun-2018 written by : FSI-Team

Credit Score Disappears?

Your credit score is considered a barometer of your financial health. Whenever you need a fresh line of credit, a prospective lender checks your score to assess your creditworthiness. If your score is satisfactory (750 and above out of 900) you are usually deemed worthy as a borrower.

But what if you find that one fine you are told that you have no credit records at all? That can indeed the stuff that nightmares are made of especially when you need credit! However, chances are that your credit score has not disappeared overnight and has stopped for any of the following reasons:

Long term absence from country without credit usage

There are times when an individual goes on assignment to a foreign country for an indefinite time. If you went on such an assignment for seven or more years and closed all your credit accounts before you left, your credit records will get erased as there are no active credit lines to base your CIBIL score calculation on.

Thus, if your job or any other reason takes you to a foreign land for an indefinite time frame, do not make the mistake of closing all your credit accounts. You may pre-pay your loans if any but keep your credit card account active. You may pay the outstanding balance on your credit card, but do not close the account.

Cold feet for credit access

There may have been a time in the past when you were reckless with your credit usage. As a result, you may have had to dispose all your credit accounts and live strictly on cash or use your debit card only as a bad credit fix. While you managed to pull yourself out of debt, the reminder of the tough times makes you shudder and thus you may have decided not to live on credit at all. While it may have been a temporary fix to your troubles, living credit free for too long a time can work against you. The absence of credit records for a long time could result in a loss of credit score.

Sorting out debt issues may have been a great achievement on your part, but chances are that you are going to need a home loan or a vehicle loan at some point of time. At such times, the total absence of credit records may result in the rejection of your loan application. At such times when you may be forced to take a loan at a higher rate of interest, to cater to your immediate need.

What to do if your score disappears:

The good news is that you can get a credit score again with a little effort. Here are some ways to do it:

Apply for a secured credit card- This is the safest and easiest way to rebuild your credit records. A secured credit card is available against a bank fixed deposit at any leading commercial bank of India. In most cases, the credit limit is usually about 80-85% of the total amount of fixed deposit. Once you start using this card and repaying the outstanding amount in full each billing cycle, your CIBIL score calculation will resume.

Apply for an easy personal loan from a non-traditional lender- If you need urgent credit and a traditional lender is likely to reject your loan application because of the absence of credit records, you can approach a non-traditional lender such as a P2P lender for a loan. Unlike a traditional lender, a P2P lender uses atypical parameters for credit assessment such as your social media footprint and your future earning capabilities based on your current salary and position at your workplace. It may thus be a good idea to access a P2P loan in the absence of credit records or even as a bad credit fix.

Once you resume the habit of making scheduled repayments on the above-mentioned credit lines, it will be easy for you to get back a good credit score in a matter of a few months.



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