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How to Repair Your Credit

It’s never too late to clean up your credit record – and save yourself thousands of dollars in exorbitant interest rates in the process.


  • Step 1: Pay off your debts Devise a plan to pay off your credit-card balances, even if it means living like a hermit and subsisting on peanut butter sandwiches for the foreseeable future.
  • TIP: Call your creditors and tell them you can settle your debt right now for 30 cents on the dollar. Keep negotiating until you get something from them, even if it’s just a lower interest rate.
  • Step 2: Get a secured card Once your credit cards are paid off, cancel all but the one with the lowest interest rate. Keep that for emergencies and for daily use get a secured credit card—one with a low limit that you pay for in advance.
  • TIP: Resist the urge to open a store account every time you can 'save 10% today!' The little bit you save will not make up for the higher interest rates you’ll pay for having so much revolving credit.
  • Step 3: Get your record reports Get your credit reports from the three main services: Equifax, Trans Union, and Experian. All have websites, and they must provide your report free once a year.
  • Step 4: Review your credit records Review the reports, and write to all three credit bureaus about any errors.
  • Step 5: Keep it up Don’t slip up. If you stay focused, before you know it you’ll be back in the clear.
  • FACT: Seven percent of Americans pay only the required minimum on their credit cards, sinking themselves deeper and deeper into debt.

You Will Need

  • Frugality
  • Self-discipline
  • Negotiating skills

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