How to Quickly Fix Bad Credit

Having a solid credit rating is important in the U.S. economy, but many people overuse credit, cannot keep up with the payments and end up with a bad credit score. While I do not advocate using credit as freely as most Americans do, it is nice to have a credit card for true emergencies. Even more importantly, having a great credit score is imperative for making large purchases, such as for a home, where good credit will help you get the best interest rate and bad credit can prevent you from getting anything at all.

Difficulty: Moderately Easy

Instructions

1. Learn the basics of credit. There are three credit bureaus to know: Experian, TransUnion and Equifax. They each keep records of your credit behavior and give you a credit score.

2. Order credit reports from the three credit reporting agencies. The federal government says that each agency must provide you with a free copy of your credit report once a year. To obtain a credit report quickly, go to Annualcreditreport.com.

3. Print out each credit report and highlight any negative information.

4. Dispute each negative item on your credit report. Do this even if you do not really have a “good” reason for paying late. Each agency has 30 days to address the issue or it must delete the entry; therefore, you might get lucky if the agency cannot reach a previous creditor, if the previous creditor has gone out of business or if the previous creditor does not keep records for very long.

5. Include the item number, creditor name, a description of what is incorrect and why and a request that the credit bureau delete or update the entry with your request. You can do this online by following the dispute prompts or you can write a letter for each.

6. Follow up and demand deletion of any item on your credit report that has not been addressed within 30 days.

7. Make sure to follow this procedure for all three credit bureaus.

8. Contact the creditors yourself and plead your case. Politely explain your circumstances when you made late payments and why it is important for you to repair your credit now (e.g. purchasing a home). For example, you could explain that while you were irresponsible with your first credit card in college, you are now responsibly employed, paying your debts and trying to purchase a home for your family. A nice sob story can work wonders as well as trying a few times, as the outcome often depends on the disposition of the person who answers the phone.

9. Each credit bureau allows you to submit a brief statement for each negative item on your credit report. Take the time to create an explanatory statement for each.

10. Finally, begin rebuilding your credit. Make payments on time. Do not overspend. Consider debt consolidation and credit counseling if you cannot afford to make the payments on time. Start using cash rather than a debit card or credit card; the former will likely deplete your bank account quickly, and the latter is what got you into this mess.

Tips & Warnings

• Do not fall for credit repair scams. People claiming to have some magical power over the credit bureaus are not being honest and are trying to make a quick buck at your expense. They cannot accomplish any more than you can by following these steps.

Who Can Help Sponsored

• How strong is your score?  Did you know checking your own credit won’t affect your score? Click here to see yours in two easy steps from Experian.

[ChristeB]

on 3/5/2009 Thanks for your feedback. I interviewed four credit repair experts for this article, who explained step-by-step what they do. As a writer and journalist, I obtain most of my information for articles from research and/or interviews. The credit repair experts I consulted said repairing credit is something individuals can do easily, but that it can be tedious and that is where hiring someone can come in handy. I checked back after reading your comment and it is legal to dispute an item even if you don't have a "good" reason for being late, so long as the reason is true.I realize that as a person who works on repairing credit, you might want to discredit others who explain credit repair strategies without hiring or paying you, but according to my sources, following the above procedure works, is legal and -- best of all -- avoids fees and credit repair scams.Also, it is "advice," not "advis