How to Remove a Bad Credit Rating

Your credit rating is usually a credit score. The three nationwide credit bureaus--TransUnion, Exeperian and Equifax--all issue independent credit scores based on information in your credit report. Credit scores range from a high of 850 down to 300, with 620 generally representing the cutoff for "good" credit. Scores just below 620 represent fair credit, while people with scores in the low 500s and below are considered to have bad credit. You cannot remove your bad credit score, but you can improve it.

Instructions

1

Review your credit report. Get a copy from Annual Credit Report, an Internet site sanctioned by the Federal Trade Commission to provide free reports under the Fair Credit Reporting Act.

2

Look for negative entries on your report that could be affecting your score. Highlight all accounts showing as more than 30 days past due, or as collection accounts or charge-offs. Charge-offs are debts you failed to pay and the creditor closed the account. Collection accounts are debts that were sold to debt collection agencies. Send in payments to bring your existing accounts current, and contact the debt collectors or creditors to pay charge-offs or collection accounts. Look for their contact information on the credit report.

3

Write letters to the credit bureaus to challenge any inaccuracies on your report. For example a charge-off may appear on your report even though you paid the account in full while it was active. Federal law requires the credit bureaus to correct such inaccuracies within about 30 days after you file a dispute. Write to the credit bureau at its address on the credit report or visit the website to enter a dispute online.

4

Pay your existing bills on time, month after month--the No. 1 key to raising your credit score.

5

Pay down your existing debt to less than 30 percent of the credit limits, a move that the website Bankrate says will also help increase your score. Using small amounts of your credit lines shows creditors that you are in control of your finances and not living on credit. Stay with the process of paying your bills on time, reducing your overall debt, and removing bad marks from your credit reports for 12 to 24 months. Successfully executing your plan in all three areas could result in your bad credit rating being replaced by a good one.