A poor credit history can have far-reaching negative effects on a person's life. With a bad credit score, a person is less likely to receive reasonable terms on a loan. This can prevent him from purchasing a house or a car, or getting a credit card. Fortunately, there are a number of steps that those with tarnished credit histories can take to rebuild their record.
Pay Down Your Debt
One of the chief factors that lowers a credit rating is the amount of outstanding debt. The first step to rebuilding a credit history is to pay down the debt currently held. If possible, do not negotiate for lower amounts with creditors, as they may mark the unpaid portion of the debt as written off, further blemishing your credit score. If you do negotiate, make sure the creditors mark your account as paid in full.
Ask for a Break
Negative marks on a credit score come from missed payments being reported by a creditor to a credit-reporting bureau. If a creditor wishes to remove a negative statement from your credit report, it can usually do so. If you have a good relationship with a lender, consider asking them to remove mention of the one missed payment from several years ago.
Tranfer Balances
The closer a credit card is to being maxed out, the more this will harm your credit score. For this reason, it can make sense to shift the balances of your cards so that they are relatively even. Skillful balancing can keep all the charges on your cards at relatively low levels. However, do not suddenly close a card: according to Bankrate.com, this can lower your score.
Check for Incorrect Reporting
According to federal law, a U.S. resident is allowed to obtain his credit report for free once a year to see what information has been reported to credit bureaus and is affecting his score. In some cases, the information reported to the bureaus is not always correct, incorrectly lowering your score. Check the report for false information and, if found, ask the company that reported it to correct it.
Open New Accounts Slowly
The only sure cure for a bad credit history is time. Borrowers should seek to repair their record by taking out new loans and paying them on time and in full. However, these accounts should be opened slowly. According to the Fair Isaac Corporation, the originators of the modern credit scoring system, opening too many accounts in a short period can lower an individual's score.
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