Real Credit Solutions

Living with bad credit can cost you additional money in interest payments, and may even result in a few credit rejections. But by implementing a few solutions to fix your score, you can completely reverse your bad credit and become a prime candidate for credit cards, mortgages and auto loans.

Reduce Credit Utilization

Credit utilization can have a positive and negative impact on credit scores. According to myFICO.com, the amount of debt carried makes up 30 percent of credit scores. For this reason, solving credit problems can involve paying down credit card balances, which reduces your overall utilization. According to MSN Money, keeping balances to less than 30 percent of the credit limit helps boost your score. Start with higher monthly payments, and limit credit card usage to speed payoff efforts.

Credit Activity

Using credit cards is another factor that affects credit scores. Closing your credit card accounts can help control your spending habits. But before making this decision, understand how closing accounts can hurt your personal rating. Credit scores factor in your credit history, or how long you've had a particular account. The longer your credit history, the better your score -- makes up 10 percent of scoring. For this reason, it's better to keep an older account opened because closing this account can reduce your length of credit history. Also, some credit card companies close inactive accounts. With this in mind, use your cards periodically for small purchases to keep the account active.

Payment Record

Paying your credit cards and loans late will reduce your credit score and stop your efforts to improve your credit. Paying on time makes up 35 percent of your score. Even if you can't make large payments each month, aim to pay at least the minimum to keep your account in good standing. Discussing financial hardships with creditors and possibly altering payment due dates can help you avoid lateness.

Credit Report Mistakes

Know what creditors are saying about you by pulling your own credit report at least once every 12 months. Annual Credit Report is the place to obtain your free yearly report. Read the report carefully and take note of inaccuracies or mistakes. Both can reduce your FICO score. Dispute these errors and ask creditors to update your file with correct information. Contact creditors personally to dispute errors or use the available link on the website.