Repairing Credit History To Avoid Loan Refusals

This post may contain affiliate links. Read about our affiliate policy here.

Our next guest post comes from Dan Miller of with some perspective on credit scores and how to avoid loan refusals. I have stated several times myself how important building good credit is, and Dan dives into ways to fix and maintain good credit.

Dan is from the greater Sydney area, born and raised in Liverpool, Sydney. After high school, he went to the Sydney University where he received his master’s degree in banking and finances. He worked as a payments officer for nearly ten years in banking and international payments in the Australian banking sector. His hobbies include soccer, running and watching Netflix.

With that, take it away Dan! ~Matt

Most people nowadays do not understand credit scores and how they can affect the outcome of a loan request, both in a positive and negative way. So to avoid any confusion, a credit score is a number that indicates how well you manage your finances and whether or not you are paying your bills on time. That number gives lenders general information about whether they should give you a loan in the first place, how much money to lend you if they decide to do so, and how much interest to charge.

Simply put, your credit score tells lenders what level of risk they are taking when giving you a loan. So if you miss a few payments, for example, a lender may charge you a higher interest rate for a loan or you may not be qualified for the loan at all. That’s why it’s important to repair your credit history and improve your credit score.

Here are a few tips on how to improve your credit score.

Pay your credit card and other bills on time

One thing that definitely affects your credit score is paying your dues on time. Every time you make a late payment, your credit score decreases. That’s why it is important to pay your bills on time and avoid the negative effect on your credit score.

Payments that affect your credit score the most are credit card, monthly mortgage, car loan and student loan payments. It’s important to remember that it is better to pay a monthly minimum than to fall behind on your payments.

Check your credit reports

It’s always a good idea to check your credit report. That way you can identify any errors or mistakes that may decrease your credit score. Furthermore, you may discover unknown names, social security numbers that aren’t yours, or accounts you aren’t familiar with, which indicates that you might be a victim of fraud or identity theft.

A great tool for checking your credit score and report is Credit Sesame.  Checking your score and report are free (no credit card required) and do not negatively impact your credit. ~Matt

Maintain a variety of credit types

Successfully managing to pay several loans at once shows that you are able to manage your finances well. Furthermore, the types of credit you use accounts for about 10% of your score and demonstrates that you have a mix of installment loans and revolving credit such as car loans, mortgage or credit cards.

The length of a credit history accounts for about 15% of the score and shows how long you have maintained credit back to the first account opened. You can consult with a company such as Clean Credit to help repair your credit history, if you have issues that need repairing.

Pay off debt in collections

Facing an overdue payment can be a tricky situation. Late payments and unpaid balances are most likely affecting your credit score in a negative way. In this scenario, you may consider a debt settlement agreement. However, a debt settlement may also hurt your credit score.  But it allows you to eliminate a debt and move on.

Get a personal loan to pay off credit card debt

You are able to significantly improve your credit score by paying off your credit card debt. You can manage this by taking a personal loan. Taking a personal loan to pay off your credit card debt can be beneficial as the interest rate for paying out your loan will be considerably lower than that of a credit card.

Leave old debt on your report

More often than not, people make the mistake of removing old debt from their credit reports. If you have solid payment records on old accounts or you have paid off your old debt, leave it on your credit report because it will be good for your credit score and negative marks about old debt disappear after 7 years.

Due to Card Act regulations enacted following the financial crisis in 2008/2009, credit card companies can no longer charge you an inactive account fee.  In other words, there is no financial downside to leaving old accounts open and, as Dan states, old debts like credit cards (even when paid off) improve your credit score. ~Matt

Don’t open too many new credit accounts at once

Opening too many credit card accounts at once can have a negative, but temporary, impact on your credit score.

Repairing your credit history may be a long and difficult process, but without a good credit score you may be in more financial trouble than you realize. Make sure you pay your bills on time to help you maintain a good credit score. That way you can avoid inconveniences in the future.

In addition to these great tips by Dan, your level of credit utilization is also a component to your credit score.  Lowering your utilization (i.e. total balances divided by total credit limits on revolving accounts) by paying off balances is a quick way to improve your credit score. ~Matt

Share this:
2017-06-19T16:02:36+00:00 June 21, 2017 6:15 am|Categories: Guest Post|Tags: , |2 Comments


  1. MyStrategicDollar June 21, 2017 at 6:49 am - Reply

    Great advice! Having good credit is essential to having long-term financial success. This allows you to get the best rates and terms instead of the banks dictating them.

    • Matt @ Lacking Cents June 21, 2017 at 8:23 am - Reply

      Completely agree! It also opens up a broader range of options. Our good credit means banks are clamoring for us, and offer significant reward incentives for their products. We have flown for free at least three times in the last year — including a trip to Hawaii. All on credit card rewards thanks to strong credit.

Leave a Reply