How to Fix Poor Credit

Poor credit can be a serious anchor on your life. It serves as an impediment to securing a loan, which makes it harder to buy a car or put down money on a house. If you have a lot of debt or are still recovering from delinquent payments, you need to find ways to repair your credit rating. Fixing poor credit won't happen overnight, but if you combine a disciplined approach with a practical plan of action, you can improve it with time.

Instructions

1

Obtain a copy of your credit report from one of the three national credit bureaus: Equifax, Experian or TransUnion. It will tell you where you stand and provide specific details on what's standing between you and better credit. AnnualCreditReport.com can connect you with any of the three bureaus.

2

Establish a monthly budget that allows you to pay down your debts while still paying for essentials such as rent and utilities. This may entail a cold, hard look at your spending habits and a resolution to drop any unnecessary expenditures from your life.

3

Cut up your existing credit cards. That removes the temptation to use them while still paying off the debt on them.

4

Contact a reliable credit counselor if you think your debts are beyond your capacity to pay back. He or she will establish a plan to help you consolidate your debt and resolve your existing financial problems. Credit counselors can also speak with creditors on your behalf and negotiate better terms for repayment.

5

Pay bills promptly. With a budget established, you now need to stick to it resolutely. Don't let anything linger and make sure your rent, mortgage and utility bills are fully paid before their overdue dates. The same thing goes for credit cards and other forms of debt: If you have established a repayment schedule, meet each month's payment on time. Not only does that work away your debt, but it establishes reliable habits which creditors will take notice of.

6

When you are completely free of debt, apply for a new credit card, either from a bank or a reliable credit union if possible. Use it sparingly and pay off the entire balance every month. The longer you do that, the more stable your credit will become.

7

Set up a checking or savings account at a reputable bank if you have not done so already. Creditors look for checking and savings accounts as a sign of stability.