How to Repair A Bad Credit History

Having good credit makes it easier to buy a home, rent a car or even get a job. If you have a bad credit history, however, it is not the end of the world. It is possible to make a few changes to improve a bad credit report. You don't have to hire an attorney or an accountant. It's possible to repair a bad credit history for free. You need an action plan and the tenacity to stick with the plan.

Things You'll Need

  • Computer with Internet access

Step 1

Request a copy of your credit report. You need to see what's in your credit history. provides free credit reports from the three major reporting agencies, Equifax, Experian and TransUnion.

Step 2

Review the credit report for errors. Erroneous information on your credit report can negatively affect your credit history. Check to make sure the report lists your name, social security number and address correctly. Then make sure that each account listed on the credit report belongs to you. Finally, take your time and go through each account to make sure the information is reported correctly. One way to repair bad credit history is to remove incorrect information.

Step 3

Compile documentation to support your dispute. Credit agencies won't remove the incorrect information unless you have documented proof that the information is wrong. To repair your bad credit history you need to locate copies of canceled checks, credit card statements, money order receipts and correspondence from or to the creditor that supports your claim. Once you've compiled your backup documentation, send a letter to the credit agencies and the creditor explaining the error. Be sure to include account numbers, dates, amounts and a concise explanation outlining the error. Follow up with the creditors and credit reporting agencies until the situation is resolved.

Step 4

Reduce your debt ratio. A debt ratio is the amount of credit you owe versus the amount of credit you have available. If you have $20,000 available and have used $15,000 of it, your debt ratio is 75 percent. Creditors like to see a debt ratio below 50 percent. The lower your debt ratio, the better it is for your credit.

Step 5

Earn more money. One of the fastest ways to repair bad credit is to increase your income. By increasing your income, you reduce your debt to income ratio. Similar to the debt ratio, the debt to income ratio measures the amount of debt you carry versus the amount of money you make. The lower your debt to income ratio, the more stable you appear to creditors.

Tips and Warnings

  • Pay your bills on time. According to, your payment history makes up 35 percent of your credit score. A few late payments can do much to damage your credit, so get in the habit of paying your bills on time.

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