How to Clean Up Bad Credit

Lots of companies claim they can fix your bad credit, but they won't do anything for you that you can't do yourself. Improving your credit record or credit score can take time, but it can be done. You'll have an easier time getting future credit when you really need it, and your interest rates will be lower.

Instructions

How to Clean Up Bad Credit

1

Obtain your free credit reports from all three reporting agencies--Equifax, TransUnion and Experian--by going online to AnnualCreditReport.com. Pay the small fee if you want to see your credit score as reported by each agency.

2

Once you have obtained your reports, look at each carefully, checking the information for errors. Scan each account to make sure your payment history and credit limit are correct.

3

Write a letter to each reporting agency, noting any discrepancies and disputing them. Keep a copy of your correspondence. Make sure you check all three reports and inform each agency of errors on their specific report.

4

Expect a response from the three agencies within 30 days. They must change which they research and find to be in error. Appeal their findings if you disagree with them. Provide additional information to support your appeal.

5

Repay your creditors. If you are behind on payments, call your creditors and work out a repayment plan. The best way to clean up your bad credit is to get a good repayment history back on your credit record.

6

Pay your credit card, car loan and mortgage bills on time. Your late payments are reflected on your credit report, and they hurt your credit rating. If you can't pay all your bills on time, make sure you pay your mortgage and your car loan first. These bills have a bigger influence on your credit rating.

7

If you don't have any credit cards, get a secured credit card. A secured credit card is one that requires you to put down a deposit of usually at least $300, and then you can charge up to that limit. Pay off more than the minimum balance on this credit card every month. A steady history of good repayment will be reflected on your credit record.

8

If you can, consolidate your credit card debts. Get one higher limit credit card and transfer your other credit card balances to this card. Close your other credit card accounts and destroy the cards. Pay off the balance on the higher limit card. Pay more than the minimum amount due. Pay on time. Having one high-limit card, rather than multiple lower-limit cards, is better for your credit score.

9

Look into free credit counseling to help you work out a budget and stay out of debt. The National Foundation for Credit Counseling can help you locate a counselor in your area.