How to Eliminate Bad Credit on Your Credit Report

A low FICO score and derogatory remarks on your credit report can stop you from getting a home loan, auto loan and other types of credit. And even if a lender approves you for financing with bad credit, this likely results in a high interest rate. Fortunately, you can reverse bad credit and clean up your credit report.

Instructions

1

Submit payments to your creditor. A good payment history helps increase your FICO score and eliminate bad credit. Know your due dates, and pay your bills on time.

2

Decrease debt-to-income ratio. Aim to use cash for everyday purchases, and develop a strategy for reducing your outstanding balances, which helps increase your credit rating. Use personal savings to get rid of debt, or consider a home equity loan or refinance to pay off your high-interest debts.

3

Pay off a collection account. Paying off a collection account doesn't automatically remove the remark from your credit report. Once you've paid the account in full, contact the original creditor or collection agency and ask it to remove the negative remark.

4

Limit credit inquiries. Applying for numerous lines of credit knocks points off your credit score, and this impulse can result in bad credit. Inquiries stay on your report for up to two years. Apply for credit when necessary, and reduce your number of inquiries.

5

Consider piggybacking. If you can't obtain good credit on your own merit, use the piggyback method wherein you add your name to a spouse, parent or sibling's credit account. Find someone with an impeccable credit history, and become a joint account holder on that person's credit card.

6

Pay attention to your credit report. Failure to analyze your credit report once or twice a year can result in bad credit. Wrong account information and identity theft can ruin your score. Order a copy of your report annually, and dispute any errors.