Oran Hall | Fixing your credit score

QUESTION: I have a problem getting credit because of a long-time bad credit I just recently settled with the bank. I took a loan in 2007 and I was offered a credit card as well - my wife and I. There was a medical problem in my family, and I took the loan to help and used some of the money to pay back people I owed for my wedding. I used to pay the loan well until I lost my job. My wife was farming with her family, so we were in big trouble. I kept in touch with the bank but was told that I had to find a way because interest was piling up and it had gone to bad debt.

I got a visa and I went to America to get work, but most, times, it was just hand to mouth so I sent home what I got. I have a better job now. After negotiating with the collection agency, they told me a sum and I paid it in February 2018. I really want to buy a house, but I can't get loans at any financial institution because of my credit score. I am kindly asking for your advice on how to fix this. I really need help and just want to start my life over.

- Rowe

FINANCIAL ADVISER: You may be able to recover from your current position, but I doubt it will happen overnight. What is good about your situation is that although you had a bad experience, you did take a sensible approach to it.

In my old-fashioned way to life, I am surprised at the extent to which people incur debt to fund their wedding. One of the risks of borrowing money is the likelihood of the borrower's capacity to service the debt changing, as happened to you when your employment status changed.

It is commendable that you kept in touch with the bank and made efforts to gain employment to meet your obligations. In spite of everything, you should be pleased that you have lifted the burden of the debt itself off your shoulders. But you are still living with the consequences of the challenges you had to service the debt.

I hope other readers will learn from your experience. Although you did not say to what extent the credit card contributed to your troubles, credit cards should be shunned as much as possible. They are very convenient, but they cause inconvenient consequences.

Note that although you acted responsibly by being in touch with the bank, it did not stop the interest from accumulating, Bankers want to collect what is due to them.

So how do you go forward from here? Any information relating to you that goes to the credit bureaus remains for seven years, so your past has a bearing on your credit score for a long time. Fortunately, you did repay your debt, so that will affect your score positively.

Credit information providers such as financial institutions are required to supply monthly updates on their customers to the credit bureaus, so your im-proved status will be reflected in the reports if there are no further negative developments.

I suggest that you request a report from a credit bureau. You are entitled to one at no cost to you each calendar year but must pay $15,000 plus GCT for each additional report.

Incidentally, and I do not know how widespread this is, a representative of the micro lending unit of one financial institution advised me that it lends to individuals with a troubled credit history on a case-by-case basis. They normally require applicants to explain how their situation arose and to participate in a social performance management programme for de-linquents and new borrowers. Participants are certified at the end of the programme.

This does not mean that you would be able to borrow all of the money you would want to as the lender may opt to lend a small amount initially.

That would not help you to buy a house, and that itself requires more than the ability to pay as you should be able to pay the deposit and closing costs.

This is a major setback for you, but it is not the end. Aim to save as much as you can to reduce the need to borrow.

- Oran A. Hall, the principal author of 'The Handbook of Personal Financial Planning', offers personal financial planning advice and counsel. finviser.jm@gmail.com