Repairing your credit can be simple. But it won't necessarily be quick. To repair your credit you need to fix credit mistakes and establish a new, clean credit history. Once you repair your credit, you will be able to get loans at a lower interest rate and qualify for a mortgage.
List All of the Debts that You Owe
Make a list of all your debt. This should include debt you are making payments on, debt you have stopped making payments on and any bills that have gone into collections. This would include student loans, credit cards, car loans and bills such as unpaid phone bills, electric bills and medical bills. One easy way to begin building this list is to pull your credit report to see if any undue bills are listed. You should also go through your records.
Get and Stay Current on Your Bills
Become current on bills that are not already in collections. This is the first step in repairing your credit history. You can raise extra money by selling things or taking on a temporary part-time job. Once you become current on your bills, continue to pay them on time. This will demonstrate that you are being more responsible with your credit and it will help to increase your credit score over time. Establishing a current good payment history will help banks overlook your past mistakes.
Pay off Your Old Debts
It is also important to take care of bills sent to collections. Often you can settle these by paying a lump sum around half of what was originally owed. Make a list of these bills and work on saving money to offer in payment of each bill. List the debts from smallest to largest. Call the collection agency and offer a lump sum as payment in full for the debt. If the agency agrees to this, do not send the money until you receive a letter that the agency will accept the payment as payment in full. Work on one debt at a time. If you contact more than one and do not have all of the money, you may begin receiving collections calls again. Doing it one at a time will prevent the phone calls.
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