How to Fix Destroyed Credit

Pick up the pieces and repair your finances.
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Whether you’ve just cut up the credit cards to rein in your spending habits or you’re recovering from the devastation of a foreclosure or bankruptcy, a ravaged credit score can affect almost every area of your life. Stand up and fight back to fix destroyed credit. It will take effort and energy, but you can rebuild your financial affairs and secure your economic future.

Step 1

Contact each of the three credit bureaus to request your credit reports. Creditors can issue reports to any of the three bureaus, so you need reports from each bureau to have complete documentation on your credit. Order annual credit reports from each credit bureau free of charge.

Step 2

Check each report carefully. If you find errors, circle them in red. You won’t be able to do anything about justified dings on your credit reports, though. Late payments stay on your reports for seven years and bankruptcy stays on your reports for 10 years.

Step 3

Fill out the dispute form that accompanied the credit report to dispute any errors. Make copies of documents you have – such as cancelled checks – for submitting with the form. Submit the dispute form to the appropriate credit bureaus to correct errors.

Step 4

Make a budget to ensure that you stay on top of your bills. If you have trouble making ends meet, call creditors to negotiate payments or to request a forbearance. Often creditors will work with you when you approach them with a proactive attitude to avoid payment problems.

Step 5

Speak with collectors if you have bills in collection. Ignoring collectors will only hurt your credit more. Arrange to pay your bills, negotiating a plan that you can afford. Get payment agreements in writing.

Step 6

Consider closing unused credit card accounts. If you have many credit cards, close your accounts gradually so you won’t impact your credit score. Call the customer service number, double-check that you have a zero balance with the account and issue a request to close your account. The company may require a written authorization to cancel the account.

Step 7

Rebuild your credit as soon as possible, especially when you’ve had a devastating blow to your credit score. Request a secured credit card from your bank and place as much money as you can afford into the account to begin demonstrating your credit-worthiness. Open a checking and savings account also to demonstrate your ability to manage and save money.

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