Can I fix my own bad credit?
The answer is: yes! Anyone can repair their bad credit themselves with a little effort. Anything a credit repair company will do to improve your credit can also be done by yourself. This will save you money and the trouble of finding a reputable company to do the work.
Step 1
First, you need to obtain a copy of your credit report. This will contain all the information you need to start the process. You are entitled to free credit reports from each of the credit bureaus each year. These credit bureaus will differ depending on which country you are in.
In the United States, for example, the legal term for a credit bureau is consumer reporting agency (CRA), and they are: FICO, Experian, Equifax, and TransUnion.
It is a good idea to order a copy of your credit report from all available credit bureaus. This is because some of your creditors and lenders may only deal (share data) with one of them. And, since credit bureaus do not commonly share information with each other, it is entirely possible to have different information on each of your credit reports. A copy from each credit bureau will give you a complete view of your credit history!
Step 2
Now you need to familiarize yourself with the information contained in each credit report. There are a number of things you want to look for including:
It is a good idea to have a number of different color highlighters or pens to identify the different types of problems that you find in your credit reports.
Step 3
At this point you want to address and resolve any incorrect information you found in your reports. You can do this by following the instructions for disputing credit report information that accompanied your credit reports. Otherwise, you can write a letter to the credit bureau and ask it to fix the mistake. When sending a letter, it is helpful to also send a copy of the report with the incorrect information highlighted.
Step 4
Here you will need to deal with past due accounts. Past due accounts have a seriously negative effect on your credit score. The more there are, the more significant this effect is. Your objective is to get all your past due accounts "current".
It is a good idea to contact a nonprofit credit-counseling organization to help you work out a plan to do this.
A credit counselor will help you consolidate your depts and work with your deptors on your behalf to reduce or eliminate finance charges. Doing this can reduce your monthly payments drastically - even up to 40% less!
Step 5
You must get your credit cards under control!
Stop using your credit cards. If this cannot be done, close these credit accounts and cut up the cards! In this step, you need to bring your maxed out accounts below their credit limits. Once they are below the limit, continue working to pay off the balances entirely.
You must be responsible with your money during all of this.
Step 6
After you have resolved the negative items on your credit report, work on adding possitive information to it.
For your existing credit cards, keep their balances at a reasonable level and make all your payments on time.
You can also apply for a new credit card to start building a good credit history. It could be easier initially to get a department-store or gasoline credit card. Promptly pay off the balance of your new credit card every month. Use the card responsibly!
If you are having no luck getting a new credit card, consider getting a secured credit card. With a secured credit card, you fund an account up front and then "charge" expenses on it. This card will show up as a credit card on your credit report and can help you build good credit history.