Best Answer: First, it would help to know what makes up your score. Here's a breakdown.
Payment history 35%
Amount of debt that's owed 30%
Length of time that credit's been established 15%
Types of credit 10%
Inquiries and New accounts 10%
Now, the biggest killer of a credit score is paying late and having a lot of debt. What you may need to do is to get a copy of your credit report and http://www.annualcreditreport.com. to see what and how much you owe.
Once you get your reports look and see how much you owe. The easiest way would be to find the smallest amounts and the ones that are the most recent first. Contact the collectors and negotiate a "payoff for deletion". That's a payoff amount that will clear the debt off your credit report. If you're able to get them to agree to this, it is necessary to get something in writing on their company letterhead before you send them a dime.
You really don't need to go to credit counseling, as that would reflect negatively on your report.
After you've cleared all of your delinquent debt, then review your report to make sure that there isn't any inaccurate information. If it is, then you should immediately dispute that with the bureaus.
If you have a close friend or family member with excellent credit, ask them if they can add you as an authorized user on their credit cards. You do NOT need a card as this would only be for reporting purposes only. Their payment history would be included on your credit report if you're able to be added.
Another thing would be to open ONE credit card. The easiest one to get would be a secured credit card. You would have to put a deposit upfront to secure the same amount in a line of credit, but at least this way you wouldn't be declined and depending on how much you put in the security deposit, YOU control the credit line, instead of the credit card company telling you how much THEY think you should have. The key is simple: make small purchases that can be paid off in full, on time every month. And you may
want to increase your credit line by adding to the security deposit every 2 months or so. That way after a year of perfect payment history, you'll get the deposit back with possible interest, and the card will convert into an unsecured one, not to mention with a credit line that you will be happy with.
I have another option that also helps but it takes time. If you're able to get a secured credit card and get up to at least a $1000 credit line, then you're in good shape to do the next option which is open up a certificate of deposit and then take out a collateral loan against it for the same amount. I'll give you an example: Let's say that I opened up a secured card got the deposit up to $2500 before it went unsecured. Well, I'm going to get that deposit back becuase I don't need in anymore. From there, I would open up a certificate of deposit where I do my banking and then take out a signature loan using the certificate of deposit as collateral, kind of the same way that I did with the credit card. Now I would take the proceeds from the loan and put THAT into a savings account to get interest off of that. Then I would pay the monthly payment every month for at least 9 months for it to show on my credit then I would pay it off. Not only have I boosted my score by showing positive payment history on a loan, but I'm still saving money in the process with the Certificate of deposit!
Finally, another thing you can do is to report montly payments like rent, utlilites, insurance, wireless phone, and other bills that don't show up on your credit reports to a reporting agency called PRBC. It helps people build credit by reporting payments to monthly bills that don't show up on credit reports, to give a more accurate picture of your payment history. Current and previous history up to 3 years back can be reported and scored in a report that can be used with your traditional credit reports.
Hopefully, with these steps you can be well on your way to getting your credit back on the right track!