How to Help People With Bad Credit

In a tough economy, Americans are either out of work or settling for a job that is not commensurate with experience; This often means a reduction of pay. Because many consumers purchase beyond what's available in their bank account, credit cards and financing have been overused. Thus, the credit scores of consumers have suffered. When advising others to improve their credit score, the person in need of help should view the credit reports, dispute errors, and make changes in the areas that reduce the credit score.

Instructions

Help a Person Repair Credit

1

Advise the person to obtain free credit reports from the three different credit bureaus every year. The three credit bureaus are Equifax, Experian, and TransUnion. Each credit bureau might report different information; Thus, there may be a different score associated with each bureau.

2

Advise him to dispute the errors on the credit report. Sometimes credit bureaus record information for other individuals with similar names. To dispute the errors, he must contact the credit reporting company that provided the credit report. Instructions on disputes is available on each bureaus's website.

3

Teach the person about the areas that heavily impact their credit score. Explain that the FICO Score is made up of the following factors:

Payment History: 35%

Amounts Owed: 30%

Length of Credit History: 15%

New Credit: 10%

Types of Credit Used: 10%

4

Advise him to make changes in the areas that reduce his credit score. Factors that typically impact the credit score are paying on time and the elimination of debt. By adhering to a carefully designed budget, he will be more likely to pay bills and debts -- on-time.