How to Repair a Bad Credit History

No matter how bad your credit is, you can take steps that will make it better.

Difficulty: Moderately challenging

Instructions

Things You'll Need:

• Financial Calculator
• Credit Counseling Services
• Credit Reports
• Secured Credit Cards

1. Pay all of your bills on time. Late payments (payments that are 30 days late or more) have a negative effect on your credit rating.

2. Reduce the number of credit cards you carry. Write to your creditors to request that they close your accounts and report this status change to all three credit-reporting agencies.

3. Avoid bankruptcies, tax liens (a lien for not paying state or federal income taxes or property taxes) and collections. A bankruptcy stays on your credit report for up to 10 years. Collection accounts and paid tax liens stay on for seven years, and unpaid tax liens will haunt you forever.

4. Request in writing that your creditors reduce the credit limits on your accounts to lower your amount of available credit. The total amount of available credit is considered by lenders even if you owe nothing.

5. Ask a family member or friend to co-sign on a small loan or credit card to help you re-establish credit. Make your payments on time.

6. Get a secured credit card to help reestablish your credit. You will have to keep a designated amount of money in an account that will be sufficient to cover your charges. Make payments on time.

7. Get a yearly copy of your credit report to catch any errors (see 'eHow to Obtain a Copy of Your Credit Report').

Tips & Warnings

• When you have a friend or relative co-sign on a loan or credit card, remember that that person's credit will be affected by the payment history as well.
• Credit-repair clinics and consumer credit agencies arrange repayment plans and restructure payments to fit your budget. But even if the creditor agrees to the plan, smaller payments and skipped payments can still be reported against you. Some credit-repair clinics charge up to $2,000 up front to get the paperwork started and cover administrative fees. Some CCAs are free. You can call the creditors yourself and make these same arrangements for free.

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.

[randy44]

on 10/19/2009 i say good start but you need more details on credit repair, i hate to pay money for information i found this ebook and though it worth reading since its FREE http://www.ebadcreditlenders.com/images/stories/Boosting_Your_Credit_Score.pdf

they have few other books too and they are all free

[nickjustice]

on 9/20/2009 Great Tips! Poor credit can be an awful downward spiral, i am embarrassed to say i had all my credit cards maxed out at one point. I was in deep trouble until my friend recommended i get a free credit repair consultation, i was able to overcome my poor credit score quickly. Heres a link where i got a free consultation i thought i would share it to help everyone, http://cli.gs/credit-repair

[helllllo]

on 6/7/2009 Regarding tip #2: Never, ever close a credit card account in good standing! It will DESTROY your credit rating instantaneously. When I was younger, I had a few credit cards I didn't use, so I thought closing the accounts would be wise to prevent a crook from stealing my account numbers and making unauthorized purchaces. Boy, was I wrong! Although I paid all my credit card bills on time and often in full, once I closed those accounts, my payment history didn't mean jack. Credit agencies and lenders look at the amount of debt you have in relation to your available credit, and the closer the ratio is to 1:1, they will view you as a big risk. That's what happened to me, and my credit rating went from very good to poor. As a matter of fact, when my husband and I refinanced our mortgage a few years ago, the bank had to remove my name from the loan because my credit rating was too low to qu...

[phillygta]

on 4/21/2009 Is it true that http://www.MyCreditEdit.com charges no money upfront for their credit repair service?

[chane]

on 11/30/2008 There is tons of misinformation and bad advice on this page and I would avoid it all together. Reading it makes me cringe.