Raising a bad credit score takes time and work. In fact, the actions you take today will only show up and have an impact on your credit score several months down the line. As a result, don't look at your credit score as something that can be repaired overnight, but rather as something you need to work at constantly to improve your financial standing.
Step 1
Start paying your bills on time. To help you get on track, make a list of all the bills you have to pay every month. Include everything from utilities to car payments to loan repayments. Then, write down the approximate time the payments are due (check your last bill), so you can be prepared with the money when the bills arrive.
Step 2
Call companies to work out a payment plan if you can't afford to pay your bills in full. Many lenders and utility companies will work with you and help you come to a number you can afford. This is especially important if you have large debts you have been failing to pay because you can't afford even the minimum payment. Lenders want to get paid and will usually agree to a reduced monthly payment or a lower interest rate if you ask.
Step 3
Start paying off your credit cards. Having credit cards will raise your credit score (because your line of credit is higher), but this is voided if all your cards are maxed out and you're missing minimum payments. Pay regularly and make more than the minimum payment.
Step 4
Order a copy of your credit report and go over any negatives or old debts you believe are unfair or mistaken. Call the appropriate companies and dispute the charges if appropriate. This is an important step even if the debts are already under the care of a collection agency.
Step 5
Keep your old accounts. Every time you cancel a credit card, your total credit lowers (you have less money available to you) and this can impact your overall credit score. Instead, talk to your credit card company to see if they would agree to a non-fee card (with no annual charges). If you're not spending anything to keep the card open, don't cancel it.
Step 6
Stop applying for loans, new cards or new financial accounts for a while. Every time you do, a mark is made in your credit record. This can make you look like a credit risk and eventually lower your score.
Tips and Warnings
- Switch to cash for small, everyday purchases, so you learn how to better manage your money and live within a budget.
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