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First thing, get a copy of your credit report

Check it thoroughly for notations made to the report that has damaged your credit:

click to obtain a copy of your report

The most likely areas that you should investigate:

— late payments
— collections
— incorrect marital status
— incorrect account histories
— closed accounts incorrectly listed as open
— judgments, tax liens, and lawsuits
— credit histories of someone with the same name
— credit histories of someone with the same SSN
— other

You need to check your report accurately and take corrective action where needed to remove or clean up negative assessments.

You have the right to dispute any remark on your report that you believe may be inaccurate or incomplete.

The Fair Credit Reporting Act (FCRA) allows a consumer to challenge the information on his credit report on the basis of "completeness and accuracy."

When a consumer files a dispute, the credit bureaus must contact the source of the credit information (the creditor) and confirm that the information is accurate, verifiable, and not obsolete.

link to our credit reporting services for information on credit reports and repair services

Continue to check your report at least annually

Post the credit report next to your finances. Use it as a goal reminder to reestablish your credit and control your spending.

Take care of any collection accounts that may be on your report

Make sure they are paid and then listed as paid on your credit report.

If you have problems paying collections, you may seek debt counseling services who can negotiate a reasonable repayment strategy. See Credit Counseling Services

Consolidate your existing credit card balances into one reasonable repayment plan.

The repayment plan will become part of your family budget as discussed in Step 3.

jump over to our debt consolidation module for consolidating card balances.

Close your existing credit and retail card accounts

If the credit card has got you in trouble, you need to break the cycle of "instant gratification".

Contact the issuing credit card company and request that they close your accounts.

Limit inquiries to your credit report

Every time you apply for credit or for some other contractual service, an inquiry will be made on your credit report. Most inquiries stay on your credit report for up to two years. Try to avoid unnecessary inquiries.

Multiple inquiries can hurt your credit. Lenders of creditors may think you’re trying to get credit due to financial difficulty. You should limit inquiries to 1 inquiry for every 6 months.

so that you know how much to allocate each month for housing, utilities, food and other expenses.

Your budget will need to include payments each month to reduce your existing debt. You may want to consider consolidation plans where the monthly repayments may be in line with your budget planning:

see budget planning
see debt consolidation plans

Open deposit accounts

Deposit accounts, especially savings and money market accounts, show stability. Open a 1-2 accounts and maintain a significant balance.

Since credit cards are must in today's economy, enroll for a pre-paid credit card program.

Consumers with credit problems can use pre-paid credit cards to budget their spending and restore their good credit. Pre-paid cards give you the purchasing power of credit cards but limit the potential risk of debt and credit problems:

Pre-paid cards work and look exactly like credit cards.

But your use of the card is limited by the amount of cash you load to the card. It is like working with cash with the use of a credit card.

• budget your monthly spending amounts
• avoid interest rate charges
• avoid getting into debt
• limit spending by the amount you load
• use where credit cards are accepted
• use the card to rebuild your credit history

You can also enroll into the Credit Builder Program to reestablish your credit history.

enroll into our pre-paid card program: more information available

You will want to avoid bankruptcy at all costs.

Bankruptcies will remain on your credit report for 10 years from the date that you filed.

You should first seek credit counseling services before discussing any bankruptcy filings. Credit counselors can work to forgive part of the debt and/or structure a repayment plan that meets your budget. Make an inquiry on your credit problems.

You may want to contact a credit counseling service if you can't resolve your credit problems on your own or if you need additional help.

These non-profit credit counseling organizations can negotiate in your behalf repayment plans that are acceptable to your and your creditors. They can also help you set up a budget:

Get started with an inquiry on your credit needs