1. Check Your Credit Report
Credit score repair begins with your credit report. If you haven't done so already, request a free copy of your credit report from each of the three credit agencies. Your credit report contains the data used to calculate your credit score and it may contain errors.
In particular, check to make sure that there are no late payments incorrectly listed for any of your accounts and that the amounts owed for each of your open accounts is correct. Also make certain there arenít accounts that donít belong to you that were mistakenly assigned to your file. If you find errors on any of your reports, dispute them with the credit bureau. You can do this yourself, or there are companies that specialize in tracking down and validating claims against you.
Many states have limits for how long a debt can be collected. If you have older debt that still appears on your credit report, there are steps to take outlined on sites like the US Governmentís Federal Trade Commission Consumer Information site on Disputing Errors on Credit Reports.
2. Make Payments by the Due Date
Making your credit payments on time accounts for 35% of your credit score. In as little as three months of on-time payments on all accounts you could see your FICO score rise. If you have trouble remembering due dates, many banks and credit card issuers offer payment remainders via email or text message. Older credit problems count for less, so the impact of past credit problems on your FICO Scores fades as time passes and as recent good payment patterns show up on your credit report.
3. Reduce the Overall Amount of Debt You Owe
This is easier said than done, but reducing the amount that you owe is going to be a far more satisfying achievement than improving your credit score. The first thing you need to do is stop using your credit cards. Use your credit report to make a list of all of your accounts and then go online or check recent statements to determine how much you owe on each account and what interest rate they are charging you. Come up with a payment plan that puts most of your available budget for debt payments towards the highest interest cards first, while maintaining minimum payments on your other accounts. And if you can put off any personal obligations, like loans from friends or family members, for a few weeks or months, that money when applied to your credit card balance will have an immediate impact on your credit score.
4. Managing Your Account Balances
What lenders advise is to pay off debt rather than moving it around. The most effective way to improve your credit scores is by using any extra cash to make an extra payment toward your credit card balance (rather than car loans, or loans for specific large purchases like appliances). But donít close any accounts as owing the same amount but having fewer open accounts may lower your scores. They also advise opening a number of new credit cards that you don't need, just to increase your available credit. These approaches could backfire and actually lower your credit scores.
5. Credit Counseling Services
There are a wide range of companies that offer credit counseling services. There are many that offer a wide range of services including budget counseling and debt management. Avoid organizations that offer only a Debt management Plan (DMP) as the only solution. In addition, if a service is listed as a non-profit it doesnít mean that it doesnít charge for its services. Take a moment and read the US Governmentís advice on Choosing a Credit Counselor.
To summarize, "fixing" a credit score is more about removing any errors in your credit history and then following the guidelines above to maintain consistent, good credit history. Raising your scores after a poor mark on your report can be overcome with even just a few months of attentiveness.