By LaToya Irby. Credit/Debt Management Expert
Welcome to About.com's Credit/Debt Management site, led by your guide, LaToya Irby. LaToya has been the credit and debt management guide since 2007. Read more
The specific steps to credit repair depends on what's on your credit report. Before you can start repairing your credit, you need to order your report and review it to stop the negative information. Many credit reports also include 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.
Any incorrect information that’s on your credit report
By far, the easiest thing to fix on your credit report is inaccurate information, relatively speaking of course. Clerical errors could easily lead to errors on your credit report. Don’t overlook these errors because they could be hurting your credit. Submit a credit report dispute to have inaccurate information removed.
Past due accounts including late payments, charge-offs, and collection accounts
Your payment history has the largest impact on your credit score.
Late payments will hurt your credit score more than anything else since payment history is 35% of your FICO score. Get current on any accounts that are delinquent. If you have accounts that are 30- or 60-days late, make those payments to keep them from taking a toll on your credit. Once accounts pass 90-days late they're considered to be extremely delinquent.
Negotiate with creditors and debt collectors to remove charge-offs and collection accounts from your credit report. They don’t have to remove this information, but you may be able to talk them into doing it.
Continue Reading Below
High and over-the-limit
Your level of debt has the second largest impact on your credit score - it's 30% of your FICO score. Ideally, your credit card balances should be at or below 30% of your credit limit. That means you’ll only have a $300 balance on a credit card with a $1,000 limit.
First, focus on bringing over-the-limit balances below your credit limit. Then, work on bringing all your credit card balances down to a more credit-friendly level.
Simply put, pay any outstanding judgments. They’ll keep hurting your credit either until you’ve paid it or it falls off after seven years (or the statute of limitations if that time period is longer), whichever comes first.
Student loan default
Student loan default isn’t always permanent. Talk with your lender to find out what you can do to bring your student loan out of default. Often, you will have to make several months of timely payments before your student loan will be considered current.
Bankruptcy, Foreclosure, Paid Tax Liens, Paid Judgments
With these types of entries, there isn’t anything to “repair” unless the entry is inaccurate. In that case you'd use the dispute process to have the item removed from your credit report. You might have to also with work the courts and banks to have their records updated.
If bankruptcy or another serious delinquency is listed on your credit report, focus on rebuilding your credit by adding positive payment history and demonstrating you can manage your credit. If you can’t get approved for a regular credit card, apply for a secured credit card. Use the card to make small purchases and pay your bill in full every month.