Help for Self-Repairing My Credit

Repairing credit is a lot like weight loss. It seems to take no time or effort to create the damage, but turning things around is a lot slower and more difficult. There are some quick steps you can take to improve your credit. But, depending on the amount and type of damage, you will have to be steady and patient in creating a positive credit picture before your credit scores really start to climb.

Tackle Your Credit Report

Get a copy of your credit report. You are entitled to a free copy once a year and you may also get a copy if you've been turned down for a loan recently because of information on your credit report. You can get copies of your credit report from all three agencies -- Equifax, TransUnion and Experian -- by logging on to the Annual Credit Report website (see Resources). Look for errors on your report. If there are errors -- such as paid debts marked unpaid or someone else's debts attributed to you -- write a dispute letter and, with copies of documentation supporting your claim, send it to the agency (see Resources).

Manage Your Credit

The best-looking credit reports have a few long-term credit accounts with low balances relative to credit available. The Fair Isaac Corp., which sets the standards for credit scores, discourages all forms of rash credit usage including closing accounts in order to improve credit scores, because the accounts will still be on the record. Also, opening new cards to transfer balances and asking creditors to lower balances all look bad on a credit report. Installment loans look better on a report than unsecured credit. If you have several cards, try to shift credit around so that each has a low balance. Then start paying them off.

Pay Bills On Time

Paying bills on time sounds easier than it is. But as you maintain solid payment history, your bad credit marks will fade further and further in the distance until they're relatively unimportant to creditors. If you can, put cards and other accounts on automatic payment. If you're having trouble figuring out how to get bills paid, see a credit counselor, preferably one recommended by the Association of Independent Consumer Credit Counseling Agencies or the National Federation for Credit Counseling (see Resources). These agencies give a free counseling over the phone, in person or via email and can help you make a plan for getting caught up with bills.

Focus Efforts

Focus your efforts on paying bills today, creating the right credit mix and paying cards down. With damage that is not an error on your report, you will have to just wait until it's far enough in the past. Paying off debts that are in collections will not take the black mark off your credit report. You may want to pay off the debt anyway, for peace of mind or to avoid a lawsuit. But the older a credit blotch is, the less weight it will carry with creditors, especially if your report has been positive since then.