A person with a bad credit rating can expect to see his financial problems compounded by his inability to take out loans at low rates of interest. This person will likely have a strong interest in repairing -- or "cleaning" -- his credit report, the information used to make up his credit score. While cleaning credit may be a long process, there are a number of steps individuals can take in the near term.
Look at Credit Report
The first thing a person should do before setting about cleaning his credit report is to determine what's in it. This can be done by requesting a copy of the report. Under U.S. law, a person is allowed to look at his credit report once a year without any charge. This can be done by visiting AnnualCreditReport.com, a website maintained by the U.S. government, which is listed in the Resources section.
Fix Errors
When looking at his credit report, a person should be on the eye for errors, particularly those related to debts that he did not take out or debts that he already paid off. If a debt is incorrectly listed as being paid off late or not at all, the person's credit score may take a hit that it does not deserve. Any errors should be reported both to the creditor who reported the debt and the credit reporting bureau maintaining the report.
Pay Off Debts
A person seeking to clean up his credit rating should also be prepared to pay off a large amount of his debts. Any late or unpaid debts will drag down the person's rating, as will a high ratio of outstanding debt to open credit. To improve this ratio, a person should either pay down his current debts or take out new credit. A good average ratio is between 20 percent and 30 percent.
Take Out New Loans
To help improve his rating, a person needs to show a credit reporting bureau that he is capable of paying off loans that are issued to him by creditors. To do this, the person should take out new loans and then pay them off in full and on time. If the person has a poor credit rating, he may wish to start out by taking out loans using a secured credit card, which is like a normal credit card, but with a bank account used as collateral.
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