|Written by Beth Weston|
Intro: When you are just starting out on your own, having the opportunity to GET credit is pretty tough. No one wants to give you a chance because you haven't proven yourself and you can't prove yourself until someone gives you a chance ... it's a vicious cycle. Once you are on the road to maintaining credit though, you may wish you could go back and start over. Things were so much simpler then. If you have found yourself in a bad credit boat, though, there are things you can do to improve your credit, even if your slate will never be completely wiped clean again.
Step 1: Pay your bills. Of course the first place you have to start is starting to pay your bills on time. Focus on the bills that have not gone to collections and pay them on time every month. Then, either start by paying down older bills by interest rate or by smallest to largest bills. Paying the bills with the highest interest rate would be the wisest thing to do but can still take a long time to get through. Personally, paying the smaller bills and seeing them drop off my budget (you do have a budget, right?) is rewarding and encouraging.
Step 2: Keep credit card balances low. Your credit score drops when you reach or go over your limit on your credit cards. Try to keep your balances low on them. Don't close the account, though. It looks good on your credit to have the accounts, just not to have high balances in them. So, if you can't help yourself, pay the card down and cut the card, but leave the account open.
Step 3: Check your credit score. You can check your credit score for free once a year at many sites online. Simply do a search for "free credit score" and many options will pop up. By checking your credit score annually, you can check your progress on paying your bills but also verify whether a company has removed the bad mark once the account is paid off. You can also see if there are accounts on there that don't belong to you - you could be a victim of Identity Theft.
Tips: Call your creditors and talk to them about your account(s). You would be surprised how much they may work with you. The fact is, they want their money and will generally work with someone who makes an effort.
Warnings: Don't ignore your accounts. It may seem easy so you can focus on paying current bills, but ignoring your creditors only makes them hound you more.