How to Repair your Credit without Spending a Fortune

Restoring a good credit rating is more than just regaining the buying power for the trappings of modern life. It is the process of restoring your name and reputation. Bad credit not only affects consumer capabilities, but can affect employment and housing prospects as well. There are many methods for personally repairing your credit report.


Meticulous record-keeping and organization are integral components of stable finances. Design a filing system that makes all necessities and documentation ready at hand. Try different filing systems until you find one that works for you. Keep all paperwork and document any communication with creditors.


Federal law entitles every citizen to one free credit report per year. More information is available from the Federal Trade Commission website on the policies regarding free annual credit reports. There is a link to, a site sponsored by the three major credit bureaus, Experian, TransUnion & Equifax. gives people a free credit report every year, with no obligation to buy a membership to a service or purchase a product.


Use a service that provides a monthly report from all three major credit bureaus. Safeguard your identity and reputation from even further damage. Research any company before you get involved. Be wary of companies that request any identifying information, especially your Social Security number.


Scan your report thoroughly. Ensure accuracy of personal information. Scour the report for financial accuracy as well. Every report has a different format, depending on the reporting policy of each bureau. There will likely be varying balances listed for each debt, as well as different states of repayment. The validity of this information depends on the policies of the bureau and the precision of the data entry clerk who put the information into the database.


Successfully disputing debt information will be difficult without documentation. It is easier to have erroneous personal information removed or changed than financial errors, simply because it is easier to remove a misspelled street name than track down debt information. For example, if the credit report lists your last-known address as 712 Pine Valley Circle, and you actually lived at 712 Pine Valley Drive, you can dispute the inaccuracy.


Contact your debtors, set up payment plans and adhere to them as agreed. The trust you earn may buy time if you need an extension on a payment. If you maintain a good payment history, the creditor will be more inclined to agree to or offer a settlement. The settlement amount is usually much lower than the total payoff. Be aware that a settlement reports as just that – a settlement, not as repayment in full, and the credit report will reflect as such.


There are countless educational tools about credit. Besides obvious resources like the library and local universities, the federal government sponsors consumer advocate agencies, such as the FTC, designed to protect consumers and educate them about their credit rights.


Make a list of the behaviors that got you into a credit crisis. Not all of them may have had to do with credit. Analyze your spending patterns and figure out where you are wasteful. When you have successfully restored your credit rating, do not make the same foolhardy mistakes. Enjoy having and holding on to expendable income. Frugality and the satisfaction of saving a dollar can be just as fulfilling as the material clutter you gain. On the other hand, there are those people who just love to have stuff. Maybe you should examine what is lacking in your life that makes you want to spend so much money.


Staying diligent may prove to be one of the hardest aspects of trying this venture in frugality. At first it may seem fun, kind of like roughing it on a camping trip. After a couple of days without your electric razor, you are starting to feel the itch for some luxury. Keep your goal of financial freedom in sight. Remind yourself what got you here. Rein in your spending habits. Control the impulse to spend money you do not have.


Think of frugal living as a financial diet. Look at the menu all you want, but you can only order from the “light ‘n fit” menu. Sometimes you just have to take stock of where you are and what changes you need to make. When your credit starts to tank, it is ostensibly one of those times. You proved yourself unwilling or unable to handle abstract sums of money. Will you be capable of handling a lesser amount if it is tangible and more easily accounted for? Here is another chance to try your hand at financial stability.