Steps to Clean Up Credit

Being proactive and taking steps to clean up your credit history signals a measure of responsibility. Although cleaning up a credit history can prove challenging, the long-term benefits are clearly worth the effort. Buying a home and financing a car often calls for an acceptable credit rating. A good rating prompts lenders to offer low interest rates on financing, and getting a good rate equals lower, more affordable payments.

Instructions

1

Avoid missed or late payments. Being one or two days late on a payment may not hurt your credit. However, creditors will report 30-day late payments to the credit bureaus, and this action hurts your rating. Pay your bills on time to maintain a good account standing and improve your credit.

2

Assess your debt load. Excessive debt from maxed-out or high-balance credit cards also impacts credit scoring and can bring down your rating. Make plans to eliminate debt and clean up your credit. Submit higher payments each month and use all extra income to reduce debt.

3

Apply for a secured credit card. After a bankruptcy, visit your bank to see if it offers secured credit cards, which help people with bad credit establish or re-establish a good rating. If so, submit an application and pay the required security deposit (typically between $300 and $500).

4

Talk to creditors about your situation. If you are unable to make payments due to money or employment problems, communicate with your creditors to see if they'll alter your due dates or lower your monthly payments. Some creditors grant forbearance, wherein debtors don't have to make payments for one or more months.

5

Ignore all offers for credit cards. Credit-card companies may bombard you with pre-approved credit offers. Recognize the danger of too many credit inquiries and destroy or decline all credit offers. Credit inquiries reduce your credit rating, and constantly submitting new applications for credit can hinder your efforts to clean up your credit.