How to Raise Your Credit Score: Repair Bad Credit for Free

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By Missy Nolan
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Is bad credit ruining your life?

When you have bad credit, it's hard to buy a new car, get a credit card, or rent an apartment. Bad credit can even prevent employers from hiring you (and in this crazy economy, you certainly don't need the added stress of a low FICO score). Do you want to raise your credit score for free, without the help of a debt consolidation agency? Your FICO score won't jump to 700 overnight, but if you follow the steps below, you can improve your credit score.

Difficulty: Moderate

Instructions

Step 1

KNOW YOUR SCORE.

The first step towards improving your credit is to learn what your FICO score is. Maybe it's better than you expected, or maybe it's worse than you thought; regardless, you need to know what it is.

You can do this online for a small fee (I have included the site that I use at the end of this article, under "Resources"), or for free when you apply for a loan (or anything else that requires a credit check, like an apartment application). Lenders will not automatically disclose this information, so if you are denied due to bad credit, ask them what your FICO score is. Most of them will tell you.
Step 2

OBTAIN A COPY OF YOUR CREDIT REPORT.

If you know your FICO score, you may have already had a chance to view your credit report. If not, request a copy from any of the major credit bureaus (Experian, TransUnion, and Equifax); each bureau is required to give consumers one free copy of their credit report per year.

If you've already exhausted your free credit reports for the year, do a Google search for "free credit report". You'll find that many companies offer a free credit report for 30 days; after that, they will begin charging your credit card. If you choose to go this route, do NOT forget to cancel your free trial before the month ends.
Step 3

REVIEW YOUR CREDIT REPORT.

Don't just skim your credit report; review every last word and number. Is your address correct? Is your middle name correct? Are all of the accounts on your credit report actually yours? Is your account information current (there is always a lag, but it shouldn't be more than 2-3 months behind)?

If you find errors on your credit report, immediately notify the bureau that reported the incorrect information. You can do this by visiting their websites (listed below); one of them (I can't remember which one) even offers a fill-in-the-blank style letter to speed up the reporting process.
Step 4

MAKE PAYMENT PLANS.

Once you know who you owe money to, it's time to start paying them. Yeah, it sucks...but what would you rather drive: a brand new Lexus, or a hoopty older than you? I think we both know which car you'll be the owner of if you don't fix your credit fast.

Not sure how to pay the people you owe? Try opening your mail. Debt collectors send tons of letters. They also call a lot, so answer all of those weird numbers that show up on your Caller ID. If you can't find them, they will find you.

If you aren't the type who likes to wait, you can usually find contact info on your credit report for each account. When you call them, all you have to say is, "Hi, I think I owe you money". They will practically jump through the phone in excitement at the thought of personally helping you. Trust me.
Step 5

INCREASE THE AVAILABLE LIMIT ON EXISTING ACCOUNTS.

If you have a credit card with a $500 limit, and you have charged $498, that affects your credit score...even if you pay your bill on time every month. If you have a $750 limit with charges of $498, your FICO score will be much better. Call the customer service hotline for your credit card and request an increase. The worst they can do is say no.
Step 6

DO NOT CLOSE ANY ACCOUNTS.

Closing your accounts will adversely affect your credit score. If you want to have good credit, keep your accounts open for as long as possible. This shows that you are stable, amongst other things.
Step 7

DO NOT APPLY FOR NEW CREDIT.

Now is not the time to apply for new credit; focus on repairing the mess you're already in. Every time you apply for credit, your FICO score has the potential to drop. I've been told that it's because you appear desperate and financially unstable if you are constantly applying for credit.
Step 8

PAY YOUR DEBTS, BUT DON'T FORGET ABOUT YOUR CURRENT BILLS.

Sometimes we become so dedicated to repairing our credit score that we forget we still have other bills. Don't drain your bank account writing checks to every collection company on your credit report; pay your current bills first, and then tackle your debt.
Step 9

CHANGE THE WAY YOU LIVE.

Figure out why your credit is bad, and then take actions to prevent your credit score from being a train wreck in the future. Are you broke? Stop wasting money, or get a better paying job (or a roommate). Do you have plenty of money, but simply forget to pay your bills on time? Put reminders EVERYWHERE...on your computer, on your wall calendar, in your planner...you get the idea. If you can set up direct debits for certain bills, try doing that.

No matter what changes you decide to make, I'm proud of you. Repairing your credit score is no easy task, but I know that you can do it!