Step-by-Step Credit Report Repair

If your credit report is littered with late payments, charge-offs or a bankruptcy, you may find it difficult to get credit, rent a home or even get a job. Repairing your credit is not something you can accomplish overnight, but with a little time and some hard work, you can improve your credit report.

Check Your Credit Report

Know what's on your credit report that could be causing you problems. You're entitled to one free credit report per year from each of the three major credit bureaus, Experian, TransUnion, and Equifax. Request a copy of your credit report and search for any erroneous information that could be hurting you. Report any false entries to each of the three bureaus.

Create Payment Plan

While there's nothing you can do about detrimental entries on your credit report that are correct, such as charged-off accounts or a bankruptcy, you can start to work on those accounts that are still open but not in good standing. If you're behind on any of your accounts, make a payment, and fast; if you can't make the minimum payment, call the creditor to set up a payment plan you can live with. If you have accounts that are maxed out or over the limit, begin paying these down -- credit bureaus and creditors alike like to see that you're not using all the credit that's available to you, so aim to use less than 30 percent of your available credit on any account.

Make Payments On Time

The sooner you start making payments on time, the quicker your credit report will start to reflect the change. If you're bad at mailing in bills, set up automatic bill pay or set reminders on your phone or computer to nudge you at least 15 days before a bill is due. While it could take 12 to 24 months to start to see an improvement, paying bills on time will improve your credit report drastically.

Use Credit Wisely

Use credit wisely from now on. If you don't have a credit card, it may be a good idea to get one, even if the only option is a secured card, in order to start building a better credit report. Use the card lightly -- keeping your balance less than 30 percent of the total credit available. Pay the balance off or at least pay the minimum payment each month. This way you begin creating a new and better credit report.