How to Improve Credit Score / Credit Repair Self Help / Fixing Bad Credit – Part 1

Even if your credit score is poor, it doesn’t need to stay this way. There are many ways to repair bad credit and raise your FICO score. And before you head to a ‘credit clinic’ and pay hundreds of dollars, you should know that there is nothing they can do for you that you can’t do for yourself, for little or no cost at all!

Following is a step-by-step Credit Repair Self Help Guide to repair credit report history:
Pull Your Annual Credit Report 
Every mission starts with reconnaissance, and fixing bad credit is not different. Your 3-in-1 credit report contains all the information about your credit situation, and the answer to why your credit score is poor reside inside it. If you haven’t already done so – pull your 3-in-1 credit report. When you order your credit report, you should also receive an explanation of the things that are negatively affecting your credit. That will give you an idea of what you need to fix to improve your credit.

Check Your Annual Credit Report
Check every detail in your credit report for errors. Pay particular care to the following factors that may be pinning your score down:

1. Do you have negative items such as late payments, defaults, bankruptcies, liens or judgments against you etc?
2. Are these negative items reported correctly? Are they all yours? Are the dates and sums correct? Are some of them INCORRECTLY reported as late?
3. Do all the inquiries that are on your credit report legitimate?
4. What is your total credit utilization? Are the sums reported correct?

See Checking Credit Reports for more information.

Analyze Your Report – Decide what needs repairing
You need to understand what’s lowering your score before you can fix the problem. Even if the truth is ugly, the first step in fixing bad credit is to know exactly what you’re up against.

Your credit report should have come with an explanation of the things that negatively affect your credit. Use it to figure out what impacts your score.

Your score may be low because of several reasons:

1. High credit utilization (above 35%)
2. Negative items such as (listed according to severity in decreasing order) bankruptcy, foreclosures, repossessions, loan defaults, charge offs, court judgments, collections, past due payments, late payments, credit rejections and credit inquiries.
3. Too much credit – how many open accounts you have.

Fixing the Problems
You need to work out your problems according to their severity and how much they weight down your score. For example, there is no point disputing an unauthorized hard inquiry if your credit cards are all maxed out, as there’s no point closing a credit card account when you have a bankruptcy on your report.

Use the following list to determine the negative item’s severity. Items are listed according to severity in decreasing order:

• Bankruptcy
• Foreclosures
• Repossessions
• Loan Defaults
• Charge Offs
• High Credit Utilization (above 80%)
• Court Judgments
• Collections
• Past Due Payments
• Late Payments
• High Credit Utilization (above 35%)
• Credit Rejections
• Credit Inquiries

Continue to Part 2 – Fixing Bad Credit for more information on how to fix the problems that impact your credit score.