How to Better Your Bad Credit

Like a rain cloud over your head, bad credit can follow you everywhere. It can affect your ability to find employment or buy a home, and may even lead to wage garnishment. However, you can climb out of the debt trap with firm determination and strong willpower. You must stop spending on frivolous items, but if you can stay firm, you could soon find yourself living a life free of debt stress, maybe even in the home of your dreams.

Instructions

Know What You Owe

1

Remove your credit cards from your wallet and place them in a plastic container. Add water to the container and put it in the freezer. Leave out one card for emergency use (that sale item is not an emergency).

2

Grab a calculator and all your credit card statements. Find the total amount due on each bill and add all the numbers together to find your total amount of credit card debt. Repeat the process with the monthly minimum payment amounts. Write down the total for both.

3

Look at the interest rate for each credit card. List the cards with the highest interest rate on top and the lowest at the bottom. Devise a plan to make extra payments on one card at a time until each balance is paid off.

4

Review your car loan, student loan and any other monthly debt payments. Add the amounts to your total debt and to your monthly payments total.

5

Review your credit history. Navigate to the annualcreditreport.com website. Download your free credit report from the three credit bureaus. Do this each year. Check each report for errors. If you find mistakes, dispute them with the reporting bureau.

Build

6

Make timely payments on your car loan. Pay the bill online at your loan company's website or send the payment in before the due date.

7

Pay your credit card bills seven business days before the due date to avoid the risk of late payment penalties. Send the full amount of the payment and, if possible, send more than the minimum payment. Set a goal to pay double the minimum payment on the highest interest card.

8

Reduce the amount of credit you owe. Stop charging new items on credit cards or applying for new credit accounts. Pay the credit cards and loans off instead of transferring the balances from one card to another.

9

Keep bills current to avoid collections or delinquencies. This includes the rent or mortgage, cellphone bill, cable bill, utilities and any other payments you may have. Pay them on time and in full.