How to Overcome a Bad Credit History

Bad credit history or a bad credit history report file is something you'll want to know how to clean up.

Well, there are no quick-fix solutions when it comes to your credit history. You can't sweep away late payments or toss out charge-offs. But with patience and discipline, you can rebuild and repair your credit sooner than you may think.

Companies may tell you they can make old debts disappear or help you start an entirely new credit history. But, their plans are illegal and could cause you to commit fraud. These "credit repair services" say a bankruptcy or bad credit history will make it impossible for you to get any credit for years to come. Certainly, a poor credit history will impact your ability to obtain new credit, but there are many options available for people who are ready to begin rebuilding their own credit file. Remember, there's nothing anyone out there can legally do to improve your credit rating that you can't easily do yourself for free.

The first step is to get a copy of your credit reportordering a copy of your credit report online - Free. Check it carefully and dispute any information that is inaccurate.

If you are overwhelmed by your debt and anticipate not being able to pay the minimum balances, you may consider credit counseling or a debt repayment plan. A credit counselor helps you devise a schedule to pay your debts, but there is no signed commitment. Seeking counseling doesn't show up on your credit report, but you are responsible to stick to the plan.

However, a debt repayment plan can affect your credit status. Creditors may report that an account is in a debt repayment plan, that some payments (if any) have been missed, or that concessions have been made to help reduce your debt to a workable amount. Under the Fair Credit Reporting Act, this accurate information about your accounts can stay on your credit report for up to seven years. In addition, your creditors will continue to report information about accounts that are handled through a debt repayment plan. However, if you can avoid filing bankruptcy, a debt repayment plan may be worth the trouble. Remember, write-offs and late payment notations may stay on your credit report for seven years - a bankruptcy can stay on for up to ten and is a matter of public record.

If you prefer to manage your credit on your own, you can plan a credit strategy much like you would a budget. Apply for a major credit card if you only have local credit, close old unused credit accounts and keep tabs on the number of inquiries in your report. If you're having trouble getting a major credit card and have no other credit, start small: apply for credit with a local business, such as a department store or a local bank or credit union. These local merchants may have lower credit standards than larger lenders and can help you to establish a track record of paying bills on time. Before you apply for credit, make sure the credit grantor reports to one of the major U.S. credit bureaus so you can build your history. 

You could also ask a friend or family member to cosign your loan or credit card application or obtain a secured card, which is guaranteed by a deposit you make with the card issuer.

Finally, make sure you make all your payments on time. Lenders give more weight to recent payments, so start showing you are a solid credit risk now.

Repairing your credit history is not a quick, easy process. But with some patience and hard work, you can rebuild your credit in a relatively short time and be on your way to a positive credit future.