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It comes as no surprise to you I’m sure when I say that your credit score is very important to your financial well being. With that said, when consumers have a financial hardship that adversely affects their credit scores, it is of extreme importance that these consumers repair their credit as quickly as possible. So,  if you feel your financial hardship is over and you are ready to start rebuilding your credit, here are the steps:

1. Get Your Credit Report: How would you feel if you went to the doctor with a broken leg and that doctor didn’t pay attention to you or do any x-rays so, they fixed your arm? The point I am trying to make here is that it’s impossible to fix something if you don’t know what is wrong with it. So, the first step to repairing your credit is getting a copy of your credit report from all 3 credit reporting agencies.
2. Review Your Credit Report: Also, a very important step, step 2 is reviewing and making lists from your credit report. The first thing you should do is read your credit report top to bottom. Get familiar with the lingo used and where you will be able to find things. Now that you’ve got the report down, it’s time to get out your pen and paper and start making notes. First, check to see if your name is spelled right, address is right and if your income is correct. Believe it or not, all of this can have an affect on your credit. If any of this is wrong, make a note of it under a note area called DISPUTES. Now, go through your debts, and make a list that consists of 2 columns. Title your columns DEBTS and DISPUTES. When you come across a debt that you recognize, take a note of it in the DEBTS area. If you happen to come across any loans that you do not recognize or you feel the amount is incorrect, list this in the DISPUTES column. In your notes you should always include the name of the lender, address, phone number, account number and balance.
3. File Disputes: Now that you have your list, the next thing that you will want to do is start filing your disputes. This is actually pretty simple. All you need to do is write a friendly letter to the three major credit reporting agencies that explains why you are disputing the account. You could say I am disputing account number ########## because I have never heard of this company and did not agree to this loan or, you can say I am disputing account number ####### because the information is incorrect, I agreed to a loan of X amount of money and they have doubled that according to this report.
4. Work With Debts In Good Standing: The debts that you currently have that are in good standings are helping you. With that said, it will be in your best interest to keep these accounts in good standings. Pay these accounts down as rapidly as possible however, keep in mind that you have to be consistent with payments. If you can send $1,000.00 this month but will have to pay the minimum payment for the next few months, it is actually better to break up the extra funds over the amount of months you feel they will need to last.
5. Working With Bad Debts: This is the fun part. This is where it is time for you to get down and dirty and start to do some work. Because these debts are already “Bad Debts”, they have already done damage to your credit and not paying them only adds insult to injury. With that said, start to call these companies to work out a settlement. Because you haven’t paid them for a few months, they feel like they are never going to get their money. When you have the money prepared to be sent, you should call the lender and offer 50 cents on the dollar. Say, “I understand that I owe you X amount of money. However, I have been facing an extreme financial hardship and I’m trying to stay away from bankruptcy. I would be willing to pay you a settlement amount of X dollars if you would be willing to accept it”. Usually these negotiations are successful however, you will normally pay 55% to 75% of your debt.
6. Getting New Debt: I must have your head spinning now. You are probably thinking, you just told me how to get out of debt but why do I need new debt. Well, the simple answer is that you can’t have excellent credit without having debt that you properly manage. With that said, it is time to get a secured credit card. You will need to pay a security deposit that will then become your credit limit. With proper use of the secured credit card over 12 months, you will generally get a refund of your deposit and you will be on your way to good credit. For tips on using credit cards properly, I suggest reading This Article.