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How to Fix Bad Credit


It is very clear that having good credit makes it that much easier to achieve the things you want to. But, having bad credit should not prevent you from achieving either, as long as you take the steps to rectify your credit and put yourself in good stead.

Before you can start repairing your credit however, you have to know what you need to repair. Your credit report will contain all the information you need to start repairing your credit. You are entitled to free credit reports from each of the three credit bureaus each year. You can also order your credit reports directly from the credit bureaus for a fee.

You should order a report from all the bureaus since some of your creditors and lenders might report only to one of the credit bureaus and because credit bureaus don't usually share information, it is possible to have different information on each of your reports. Ordering all three reports will give you a complete view of your credit history. You should also make a copy of each report. Read through your reports, become familiar with the information and highlight what you need to repair. Here are some steps you can take to fix your bad credit :

If there is are errors on your credit report, write to the bureau and ask it to fix the mistake. You could also contact the creditor who reported the error, as some creditors will contact the bureau on your behalf.

If the bad spots on your credit report are from outstanding debts, repay them as soon as possible. Pay off those with the highest interest rates first.

If you find that your debts are overpowering, contact a nonprofit credit-counseling organization to help you . A counselor will help you consolidate your debts and will contact your debtors on your behalf to reduce or eliminate finance charges. This can reduce your monthly payments by up to 40 percent.

Close your credit accounts and cut up the cards. Sell valuables or liquidate assets that will help you repay your debts. Buy only the things you absolutely need and use the rest of your earnings to pay off your debts.

Work with your counselor to repay your debts and try to live in a way that will help you to re-establish good credit. Pay your bills and mortgage on time, keep the same address and job, maintain savings and checking accounts, set a budget and stick to it.

When you have repaid your debts, apply for a new credit card to build a good credit history. You may start with a department-store or gasoline credit card or one from an employee credit union. Pay off the balance of the credit card monthly to build good credit and use the card responsibly.

If you don't qualify for a regular credit card, apply for a secured one. With a secured credit card, you fund an account up front and then "charge" expenses on it. This card will show up as a credit card on your credit report and, if used responsibly, can help you build a good credit history.

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