You cannot wave a magic wand and fix bad credit, but you can clean up your report and establish a better credit score. Good credit is important to acquire goods and services in our society, and it can help you save a lot of money on finance charges.
Dispute Negative Accounts
Perhaps you've seen advertisements promising to fix your bad credit and remove negative items from your report---in reality, these services are performing a task you are entitled to do by law: disputing items on your credit report.
Never pay someone to do something you can easily do on your own. Notify the credit bureau of the item you wish to dispute. The bureau has 30 days to open an investigation. They will contact the original creditor to furnish proof of the negative account---the creditor has 30 days to prove the negative item is inaccurate. Sometimes you will win this battle, other times you will lose. Take advantage of the opportunity and dispute every negative item on your credit report. Sometimes the creditor will neglect to respond or cannot furnish proof, which will require the item to be removed from your credit report.
Settle Past Mistakes
Charged-off accounts or collections can haunt you for up to seven years. Settling the account with the creditor will not remove the item from your report, but it will mark the account paid. Most creditors will settle old accounts for a small percentage of the original balance---sometimes as low as 25 percent.
Settling past mistakes will improve your credit score and show other lenders you are making an effort to improve your situation.
Acquire New Credit---and Pay it Back
The best way to fix bad credit is to acquire new credit and pay it back as agreed. If your credit history is badly damaged, you may have difficulty finding someone to loan you money. If this is the case, consider taking out a secured loan or applying for a secured credit card. These accounts offer little risk to lenders because you are borrowing against your own money.
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