How to Get Help With Fixing Your Credit Rating

Improving your credit rating takes persistence. Your credit didn't become negative overnight, so improving it will take a bit of time and effort. Credit repair is really a lifestyle change and not a quick fix from a formula. The new financial habits you form during the credit repair process could help you live a life of financial freedom. Consider some steps to take to improve your credit rating.

Instructions

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Budget: There are many free budgeting tools online for the beginner. Dave Ramsey, host of a nationally syndicated radio show, offers comprehensive personal finance resources on his website, daveramsey.com. Have a list of your income and expenses so that you can make a plan to repay your debts and improve your credit score. Include savings in your budget, no matter how small. Eventually, your savings will build and you can pay for emergency expenses with your cash and not incur credit card debt.

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Credit report: There are also numerous free online sources to obtain your credit report; however, be sure to use the official site---annualcreditreport.com---where you can obtain your free credit report annually from the three nationwide consumer credit reporting agencies: Equifax, Experian and TransUnion. Verify your identity and print or save your credit report. Occasionally, you might need to request your credit report in writing, which could delay the process. Confirm the report for accuracy and dispute any errors. Be familiar with the Fair Credit Reporting Act so that you will know your rights.

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Public records: Public records consist of judgments, foreclosures, bankruptcies and medical or other collections. These are typically listed in the beginning of your credit report under public records. This is the most important place to begin the credit repair process, because creditors take these debts seriously. Contact each creditor. Be polite and respectful. Ask to make arrangements to pay your debts. Creditors are usually willing to settle for pennies on the dollar. Keep a log to record your conversations and transactions, and get any settlements in writing. Request and keep receipts when debts are paid or settled in full.

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Past due accounts: Begin making payment arrangements with your most delinquent accounts first. Negotiate with your creditors and respectfully request lower interest rates and fee waivers. Creditors will usually be willing to work with you, especially if you are making a serious attempt to repair your credit. You might need to request a hardship repayment plan. Make a goal to pay off your smallest debt first, and then use that money to undertake the next largest debt and persevere until you are current. Keep the commitments you make to the creditors, or the interest and fees will likely be back with a vengeance, and your credit score will drop.

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Credit card limits: Lowering your credit card limits might improve your credit rating; however, lower only a few cards at a time or you'll end up lowering your score instead of raising it. Outstanding credit card balances should not be more than 30 percent of your maximum credit card limit, so start paying your cards down below this threshold or contact a few creditors and ask for a lower credit limit.

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Older credit cards: Your credit score is partly based on the age of your credit accounts and how they have been handled. Your probably have some older credit accounts and cards that are in good standing. Whatever the cost, don't allow these to become past due. Use these accounts once in a while to maintain your good credit rating with them.

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Re-establish credit: Re-establishing new credit can also help raise your credit score. Apply for new credit, but start small. Go to a local store and apply for credit. Apply for new credit only about once every six months, or the numerous credit inquiries will lower your credit score. Work your way up to a nationally recognized major credit card such as American Express. If, even one time, you are unable to pay your balance off in full at the end of the month, cut your credit card up and pay it in full immediately.