First of all, take a few deep breaths. Ok, now let's get started. Forget about everything you've heard about credit repair; the scam stories, the "it does not work" stories … get all of that out of your mind, because it absolutely works and it's not that difficult at all. Have you ever noticed that the people telling you that credit repair does not work usually have pretty bad credit themselves and have not had good credit in a long time? Just something to think about.
You know you have bad credit, because you can not get approved for any loans that you apply for, but that's not good enough. We need to know exactly how bad it is, so let's get a copy of our reports. As you probably already know, there are 3 major consumer reporting agencies (credit bureaus), Equifax, Trans Union and Experian. You will need to get a report from all 3 of them. The best way to do that is to get them separately from each credit bureau. You can do that over the phone or by mail. You can also get your reports through a monitoring service.
You can also go to AnnualCreditReport.com and order your reports for free from there, but if you do that you give the bureaus an extra 15 days on your investigations. You do not want to do that. Pay for your reports.
Dispute Negative Items
Under the Fair Credit Reporting Act, you have the right to dispute any information contained on your credit report. This is simply done by writing the bureaus a dispute letter. Once they receive your letter, they are required to verify the information with the furnisher. They have 30 days by law to do so. If the information can not be verified, it must be deleted.
Many people will tell you that if the account is "really" yours, you can not dispute it. However, if you read the FCRA, it does not say anything about that. Whether or not the account is "really" yours has no bearing on the credit bureaus responsibility to verify it. If it can not be verified, it must be removed from your report. If the creditor can not provide verification of your account, they can not legally report it on your credit reports. It's that simple.
Build Positive Credit
After you've cleaned up your credit report, the key to rebuilding credit is to get positive information reporting. Acquiring new positive accounts is just as important as deleting negative information. One of the best ways to do that is by getting a secured credit card. The interest rates are usually pretty high and the limits pretty low, but that's OK because you are strictly using these cards to build credit. Keep your balances at about 30% of your limits.
The most important part of the credit repair process is learning from your mistakes and realizing where you went wrong. Learn to live below your means and budget your money so that you do not have to go through it again.