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How Should I Fix My Credit? – Melissa

I have been on my own since a young age and have been using my credit. Now that I’m older i realize the mistake that i made. I have no credit card dept, but i do have dept .. medical, and cell phones, gas company, etc. Its about 11,000$ worth. i wanted to go with a company to help because i don’t know much about this. Please help where do i start?? what should i do??

Melissa

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The Answer

Dear Melissa,

The first thing to realize is this process is not as complicated as you might imagine.

It will take you a few steps to deal with this but you can emerge from this by eliminating your debt and rebuilding your credit.

The first step is to get a copy of your credit report.

Get a Copy of Your Consolidated Credit Report

Get a copy of your consolidated credit report. It is the type of report that includes all the major three credit reports in one report. I only use a consolidated credit report to check my credit and the link will take you to the credit report I use.

Your credit report is like a report card of sorts. You need to look it over and make sure that all the accounts listed on your credit report are yours. If they were not, you need to write to the credit bureaus that are reporting them and tell them they are not your and ask to have them removed. It’s like you looked at your school report card and it listed classes you did not take. They should not be there.

If the rest of the accounts belonged to you but you had a bad track record with them, that information stays on the report just as if you got a D in a class you took. Just because you got a bad grade does not mean the class is removed from a report card.

After seven years the bad credit items will no longer be reported on your credit report. When you look at your consolidated credit report if any of them list negative information longer than the seven year period, then when you write to the credit bureaus to point out any incorrect information, you can tell them about the old items.

Generally the credit bureaus are good about automatically removing the old items.

While you are at it, look for any delinquent accounts that may be younger than seven years old. If you have any, pay them off. The contact information for the creditor will be on your credit report.

I also recommend you get a free account on Credit Karma so you can use the free credit simulator to see how changes to your balances or accounts will improve your credit score. This way you can plan what actions to take first to get the maximum improvement.

Credit Karma will also provide free daily credit report monitoring and free credit scores but only for one credit bureau. Still, it’s a free service that can be very beneficial.


Look for the outstanding accounts on your consolidated credit report and start with the smallest balance first. Contact the holder or collector of that debt and make repayment arrangements.

If you don’t think you can afford to repay those old delinquent debts you could look at a debt settlement approach to deal with them. Debt settlement may allow you to satisfy the old debts but you need to fully understand the consequences of settling your debt.

At the same time as you are dealing with resolving the old debt, you can begin to rebuild your credit. Just follow this process to do that.

Boosting Your Credit Score With Good Credit Using a Secured Card

Using the report card analogy, if you wanted to bring up your GPA you would need to earn some better grades to do it. It is the same with your credit report. If you want to bring your score up you need to start having new and good credit reported about you.

The best way to do this is to get and use a secured credit card. In fact get two different ones. I put together a section of the site that lists reviews for secured cards. Look at the secured cards here.

The advantage of getting a secured card is that you will get the credit card and not get a rejection on your credit report that will further hurt your credit. A rejection can be easily spotted by looking at the inquiry section of your credit report and seeing there is not a corresponding card opened. And with your current bad credit, if you applied for an unsecured card, you would get rejected.

The reason you will get the secured credit card on the first attempt is because you need to put up a deposit with the bank that is equal to your credit limit. The deposit will earn you interest and in the unfortunate event you were unable to pay your card and defaulted, the bank would use your deposit to pay the debt.

When looking for a secured card you want one that will report to all three credit bureaus. This is key. We need your new good payment history reported.

Now when I say use the card, you do not need to carry a balance from month to month. Just use the card for regular purchases and pay the card off either immediately or at the end of the month.

Also, if you get a secured card with a $300 limit, never have more than 35% of the limit on the card. Even though your initial limits may be low, you don’t want to max them out. You can always increase your limits by increasing your deposits. You can increase your credit limit by increasing your deposit with the card company.

I suggest getting more than one card so you can get as much good juice flowing to your credit report without having too many credit cards open. You could actually go with three if you wanted to, but no more than that.

Just make sure the card will report to the credit bureaus.


Please post your responses and follow-up messages to me on this in the comments section below.

Big Hug!

How Should I Fix My Credit?   Melissa
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About Steve Rhode

Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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