How to Repair Bad Credit

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Living with bad credit in America today is possible, but it's tough. Bad credit makes many things difficult, impossible, or more expensive.

We all know that banks check credit scores before they give you a credit card or a loan. If you're getting new utilities turned on in your name, the company will check your credit to decide whether you should pay a security deposit. And while some states are banning the use of credit scores in certain practices, having good credit is always an important goal to which to aspire.

Why Pursue Credit Repair?

Credit repair is critical to saving money on loans and credit cards, but that's not the only reason to repair your credit. A better credit score—complemented by a pristine credit report, which can be viewed by a potential employer if you’ve given them permission—can also help your cause when you're trying to land a new job.

Likewise, if you dream of starting your own business or you want the security of knowing you can borrow money or increase your credit limit if you need to, you should repair your credit sooner rather than later.

Do-It-Yourself Credit Repair

While it may seem overwhelming to embark on the credit repair process, you don't have to hire a professional to fix your credit for you. The truth is, there is nothing a credit repair company can do to improve your credit that you can’t do for yourself. Save some money and the hassle of finding a reputable company and repair your credit yourself. The next steps will show you how.

Get the Latest Copies of Your Credit Reports

Before you can start repairing your credit, you have to know what you need to repair. Read through your credit report to see what the negative items may be adversely affecting your credit score.

By law, you’re entitled to free credit reports from each of the three credit bureaus each year. This yearly free credit report is available through, which is sponsored by Experian, Equifax, and TransUnion.


You can get one free credit report per week from Equifax, TransUnion, and Experian through December 2023 at

In addition to requesting them online, you can also order free credit reports by phone (877-322-8228) or mail (send a completed Annual Credit Report Request Form to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281).

More Ways to Get a Free Credit Report

You can also get a free copy of your credit report through Experian, Equifax, and TransUnion, with each bureau offering slightly different methods of obtaining your report.

When you register for an Experian account, you'll receive a new free credit report every 30 days at sign in. Similarly, when you sign up for a myEquifax account, you'll get free access to six additional credit reports each year. TransUnion will redirect you to to order your annual free report. However, if you would like an additional TransUnion credit report, and you don't qualify for a free or reduced rate, the fee will be based on the state in which you live.

You're also entitled to a free credit report if you've been turned down for credit because of something on your credit report, if you're currently receiving government assistance, if you're unemployed and plan to look for a job soon, or if you think you've been a victim of credit card fraud or identity theft. Some states also have laws that let you get an additional free credit report each year. All of these free credit reports should be ordered directly through the credit bureaus.

Why Order All Three Credit Reports?

Some of your creditors and lenders might report only to one of the credit bureaus. Since credit bureaus don’t typically share information, it’s possible to have different information on each of your reports. Ordering all three reports will give you a complete view of your credit history and let you repair your credit at all three bureaus instead of just one. Make an extra copy of each report in case you need to dispute information. You can send a copy of your report to the credit bureau and keep a copy for yourself.

Review Your Credit Reports for Errors

Once you have your credit reports, read through them completely. If you have a long credit history, your credit reports might be several pages long. It's a lot to digest, especially if you're checking your credit report for the first time. Take your time and review your credit report over several days if you need to.

Reading Your Credit Report

Become familiar with the information contained in each of your credit reports. They'll all look very similar, even if you've ordered them from different bureaus. Each credit report contains your personal identifying information, detailed history for each of your accounts, any items that have been listed in public record like a bankruptcy, and the inquiries that have been made to your credit report.

Deciding What Needs Repair

Here are the types of information you'll need to repair:

  • Incorrect information, including accounts that aren’t yours and payments that have been incorrectly reported late
  • Past due accounts that are late or charged off or have been sent to collections
  • Maxed-out accounts that are over the credit limit

Use different color highlighters for each type of information to help you easily make a credit repair plan. You'll take a different approach for incorrect information than you would for a past-due account, so using different colors saves time when you're ready to make a payment, call a creditor, or send a dispute letter.

Dispute Credit Report Errors

You have the right to dispute any information in your credit report that's inaccurate, incomplete, or you believe can't be verified. When you order your credit report, you'll receive instructions on how to dispute credit report information. Credit reports ordered online typically come with instructions for making disputes online, but you can also make disputes over the phone and through the mail.

The Best Method for Credit Repair Disputes

Disputing online is often faster and easier, but leaves you with no official paper trail (although you could take screenshots of your dispute). The same thing goes for making a dispute over the phone.

Sending your disputes through regular mail has several advantages. First, you can also send proof that supports your dispute, for example, a canceled check showing you made a timely payment on time. You can also keep a copy of the dispute letter for your records.​

Finally, if you send your dispute via certified mail with return receipt requested, which you should do, you will have proof of the time you mailed. This is important because credit bureaus have 30–45 days to investigate and respond to your dispute.


Keeping a credit report dispute template on your computer will allow you to quickly modify details for different disputes and different credit bureaus.

Sending Your Dispute

When you send your dispute, also include a copy of your credit report with the item you're disputing highlighted and a copy (not the original) of any proof you have that supports your dispute.

If you don't send enough information about your dispute, the credit bureau can decide your dispute is frivolous and decline to investigate the dispute or update your credit report.

If your dispute is well-substantiated, the credit bureau will conduct an investigation—which is often as simple as asking the creditor if the information is accurate—and come back to you with a response.

Credit Bureau Dispute Alternative

You can also send your disputes directly to the bank or business that listed the information on your credit report. They have the same legal obligation to investigate your dispute and remove inaccurate, incomplete, or unverifiable information from your credit report.

What Happens After a Dispute?

If the dispute is successful and your credit report is updated, the bureau will make the change, alert the other credit bureaus, and send you an updated copy of your credit report.

On the other hand, if the item isn't removed from your credit report, your report will be updated to show that you've disputed the information, and you'll be given the opportunity to add a personal statement to your credit report.

Personal statements don't affect your credit score, but give additional insight into your dispute when a business manually reviews your credit report.

Tackle Past Due Accounts

Your payment history impacts your credit score more than any other factor; it's 35% of your score to be exact. Since payment history is such a large part of your credit score, having several past due accounts on your credit report will significantly hurt your score. Taking care of these is crucial to credit repair. Your goal is to have all your past due accounts reported as “current” or “paid.”

Beware of Charge-Offs

Get current on accounts that are past due but not yet charged off. A charge-off is one of the worst account statuses and happens once your payment is 180 days past due.

Accounts that are delinquent but less than 180 days past due can be saved from charge-off if you pay the total amount that you owe. The further behind you are, the higher your catch-up payment will be. Contact your creditor as soon as possible to figure out what you can do to get back to current. They may be willing to waive some of the late penalties or spread the past due balance over a few payments.


After you pay off a debt, a creditor may be willing to re-age your account to show your payments as current rather than delinquent, but you'll have to actually talk to your creditors to negotiate that.

Pay accounts that are already charged off; you're still responsible for a charged-off balance. As they get older, charge-offs hurt your credit score less, however, the outstanding balance will make it hard—and sometimes impossible—to get approved for new credit and loans. Part of your credit repair must include paying charge-offs.

If you pay a charge-off in full, your credit report will be updated to show the account balance is $0 and the account is paid. The charge-off status will continue to be reported for seven years from the date of the first delinquency. Another option is to settle charge-offs for less than the original balance if the creditor agrees to accept a settlement and cancel the rest of the debt.

The settlement status will go on your credit report and also remain for seven years. You may be able to convince the creditor to delete charge-off status from your credit report in exchange for payment, but this isn't easily done. The most important thing is to pay your charge-off; if you can get a favorable account status, it's an added bonus.

Take care of collection accounts. Accounts get sent to a collection agency after they've been charged-off or fallen behind several months. Your approach to paying collections is much like that for charge-offs; you can pay in full and even try to get a pay for delete in the process, in which the lender agrees to remove details of the debt from your credit report upon receipt of payment. Or, you can settle the account for less than the balance due. The collection will stay on your credit report for seven years based on the original delinquency.


Even accounts that aren't normally listed on your credit report can be sent to a collection agency and added to your credit.

Bring High Account Balances Below Your Limit

Your credit utilization, a ratio that compares your total debt to total credit, is the second biggest factor that affects your credit score. It's 30% of your score. The higher your balances are, the more it hurts your credit score.

Having maxed out credit cards costs precious credit score points (not to mention costly over-the-limit fees). Bring maxed out credit cards below the credit limit, then continue working to pay the balances off completely. Your credit score will respond more favorably to credit card balances that are less than 30% of the credit limit, below 10% is ideal.

Loan Balances and Your Credit Score

Your loan balances also affect your credit score in a similar way. The credit score calculation compares your loan current loan balance to the original loan amount. The closer your loan balances are to the original amount you borrowed, the more it hurts your credit score. Focus first on paying down credit card balances because they have a greater impact on your credit score.

Past Due Accounts vs. High Balances

It's important to prioritize where you spend your money each month. Focus first on accounts that are in danger of becoming past due. Get as many of these accounts current as possible, preferably all of them. Then, work on bringing down your credit card balances. Third are those accounts that have already been charged-off or sent to a collection agency.

Get New Credit

After you’ve resolved the negative items on your credit report, work on getting positive information added. Just like late payments severely hurt your credit score, timely payments help your score. Continue to keep those balances at a reasonable level and make your payments on time.

Where to Get New Credit

You might have to reestablish your credit by opening up a new account. Past delinquencies can keep you from getting approved for a major credit card so limit your credit card applications to one, at the most two, until your credit score improves.

This will keep your credit inquiries low. Credit inquiries are added to your credit report each time you make a new application for credit; too many of them hurt your credit score and your ability to get approved.

If you get denied for a major credit card, try applying for a retail store credit card. They have a reputation for approving applicants with bad or limited credit history. Still no luck? Consider getting a secured credit card, which requires you to make a security deposit to get a credit limit. In some ways, a secured credit card is more useful than a retail credit card because it can be used in more places. 


Certain subprime credit cards are geared toward helping customers who wish to rebuild their credit; however, make sure you choose an offer from a reputable lender and compare all fees and interest rates before applying.

Keep These 7 Credit Repair Tips in Mind

Keep these credit repair tips in mind as you work toward a better credit score.

  1. Salvage what you can. Don’t sacrifice accounts that are in good standing for accounts that are not. Continue making timely payments on all your current accounts.
  2. Spread your disputes over a period of time. If you're disputing several items on your credit report, only put one dispute in each letter and space out your disputes. The credit could become suspicious of too many disputes and consider them frivolous.
  3. Be careful about closing credit cards. Rarely does closing a credit card help your credit score. In fact, closing a credit card is more likely to hurt your credit score, especially when the account has a balance. As long as you can avoid temptation to spend on a credit card you no longer want, it’s better to keep it open and occasionally use it for small purchases to keep it active.
  4. Learn what things hurt your credit score. Knowing what can negatively affect your credit score can help you steer clear of making such mistakes.
  5. Don't be discouraged by setbacks. Your credit score may drop unexpectedly as you go through credit repair. This could happen if you’ve paid off a debt and then closed an account, which can affect the credit utilization ratio of your remaining debt as it relates to your total available credit limit. Continue adding positive information to your credit report and your credit score will improve over time.
  6. Get consumer credit counseling. If your debts are overwhelming, creditors aren’t willing to work with you, and you can’t seem to come up with a payment plan on your own, consumer credit counseling is an option for getting back on track. Choose a non-profit counseling agency that’s a member of the National Foundation for Credit Counseling or the Financial Counseling Association of America. 
  7. If bankruptcy is inevitable, file sooner rather than later. If filing bankruptcy is the only way you can get back on track, don't waste time on strategies that won't work. Evaluate whether you should file bankruptcy early so you can start the process and begin to rebuild your finances.

Frequently Asked Questions (FAQs)

How do I fix my credit enough to buy a house?

The strategies mentioned above will help you work toward buying a house. Keep in mind that the credit score is just one aspect that lenders will consider for mortgages, and you can negotiate the terms. If you have a big enough down payment or a strong work history, for example, then lenders may be more lenient with their credit score requirements.

What is a good credit score?

You become a "prime borrower" once your credit score reaches 660. Once it reaches 720, you become a "super-prime borrower," and lenders will likely offer you competitive rates and terms.

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