Bad credit is worse than having no credit at all. At least with no credit you start with a clean slate. Repairing a damaged credit rating may be difficult but it is not impossible to accomplish. It is up to you to determine how serious you are about cleaning up past mistakes and wanting to rebuild your credit rating.
First and foremost you must perform an accounting of all your debts. Include everything from mortgage, rent, utilities, credit cards and any bill you have that is still outstanding. It matters not how large or small these debts are they all affect your credit rating. Take a pad of paper or if you are spreadsheet savvy you can do this on your computer and make a list of whom and what you owe. Include everything even the paperboy. You need to first get a grasp on where your money is going.
When you accumulate debt you cannot act like an ostrich with your head in the sand. You need to acknowledge there have been mistakes made and demonstrate you are serious about correcting your financial woes. Instead of avoiding creditors attempt to work with them, ignoring them can have disastrous effects. If ignored, a creditor will turn to the courts for compensation in the form of levies and judgments which will have a long term effect. So you must work with your creditors as quickly and honestly as possible to prevent this from happening.
Using the list you have made attempt to identify those which you are capable of eliminating quickly. Cross each of those off as you list them on another piece of paper with a label heading “Doable”. Next review the list for any bill that may be a one time payment which you still owe. List these on another separate piece of paper labeled “ask for terms”. The remainder should be monthly payments for housing, utilities and credit cards. Beside each list the amount of minimum payment that is required. Are you able to manage payment of these bills with your current income? If not it is time to call each creditor on the list to see if it is possible to make smaller payments while preventing your name from being reported to a credit bureau. This will prevent your credit rating from sustaining any further damage.
Bad credit ratings usually occur when people spend more than their disposable income. So create a budget for yourself. Eliminate quickly any expenses that are purely discretionary such as eating out or entertainment. If you are serious about repairing a damaged credit rating you need to suck it up and get it fixed quickly. Apply any extra money saved to eliminating the bills from your “doable” list. Only do this when you have reached agreement of terms that fit within your overall income with the creditors on the other two lists. Demonstrating your willingness to own up to your debts and pay them off will prevent further damage and as debts are eliminated your credit rating will surely improve.
If for any reason you feel that your credit rating has been affected by no action of your own doing you will need to contact the credit bureaus that are reporting your bad credit. Ask for the reason they are ranking you with bad credit. If it is in error they can assist you to clearing up and restoring your rating. It is possible that a creditor could have reported you erroneously or there was a bill from long ago you totally forgot about. Attaining and maintaining a good credit rating does take some self discipline but is essential for your overall financial wellbeing.