How to Solve Bad Credit and Its Examples

Bad credit is one of the problems that arise when the debtor is unable to settle his obligations to the creditor. If someone experiences this, it is certain that they will have difficulty when they want to borrow the next credit. Banks or fintech companies will reject someone if they are proven to have bad credit. So, how to solve bad credit and its examples that creditors and debtors can learn from?

If you are interested in finding out about this, then consider the following useful information to understand it well.

How to Solve Bad Credit and Its Examples

When applying for various forms of credit, one must go through the BI Checking process. Here, they will receive a score indicating their credit status. The score is based on collectability records. The details of this score are as follows:

• Score 1 (Exceptional), which is a borrower or customer who is never in arrears and always pays credit loans on time until the loan is paid off.
• Score 2 (Very Good), namely borrowers who are in arrears on credit payments for 1-90 days.
• Score 3 (Good), namely borrowers who are in arrears on credit payments for 91-120 days.
• Score 4 (Fair), namely borrowers who are in arrears on credit payments for 121-180 days.
• Score 5 (Bad), namely borrowers who are in arrears on credit payments for more than 180 days.

If you get a score of 1 or 2, you can be sure that the credit application process can still run smoothly. However, if they are on a score of 3, 4, and 5 which state that they have bad credit, then the credit will be very difficult to get approved.

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So, what to do when a debtor has bad credit? Here are some settlement techniques for bad credit that you should do.

1. Reschedule the Payment

Debtors can apply for rescheduling of the timing of their payments. As a creditor, you can accept the rescheduling if they have good faith to pay off their obligations. To be more convincing, then you must make a new agreement so that the debtor keeps their word.

2. Change Repayment Terms from Credit

In addition to changing the payment schedule, another way that can be done is to change the various terms of credit repayment, ranging from the loan period, payment method to the interest rate. This collective agreement to make various changes is expected to be able to assist debtors in completing their obligations.

3. Use Legal Means

This action can be considered as a last resort when there is no good faith shown by the debtor to be able to settle his credit obligations. Creditors can take several routes. You can do this starting from the district court based on Article 1131 of the Civil Code, through the commercial court to using the services of the police.

Those are various techniques to overcome the bad credit situation for both a debtor and a creditor. From the explanation above, we hope that every problem can be resolved before taking legal action which of course can be detrimental to certain parties. In order to avoid this, use Collact debt collector application from AdIns for your fintech business.

The application can make it easier for customers to apply for credit, get installment payment information, payment history and various other useful information. The ServIn application is also equipped with customer profile filtering features and automatic installment calculations that make it easier for you and your customers.

You don’t have to be confused about how to solve bad credit anymore only with this application!