To start any credit fix program, you need to know what your current credit looks like. Get a copy of your credit report, but it can also be useful to order a credit report that includes your credit scores.  By subscribing to a service that lets you see your credit scores, you can monitor improvement of your credit score while you begin your credit repair program. A credit score service can cost under $10 per month.  However it’s not necessary to get scores to start fixing credit.  You might consider checking your credit score once at the beginning of your program, and again after several months into your credit fix program.

What’s the most important thing you can do to fix credit?  The hands down most important item is to start paying on time. Even if you have bad payment history on your credit report, starting to make current payments can improve your credit score within just a few months.

Another way you can fix credit fast is to close some cards that you have open. If you have credit cards with small balances or no balances, consider paying those right away and closing the accounts. Often, having multiple credit cards available to you can score against you with credit lenders.  The sooner you can start closing some cards, the sooner they will come off your credit report.

It’s important to remember that  most credit reporting agencies will tell you that it can take three months for a change in your credit file to appear.  Sometimes no matter what you do it will take those three months for a change to show up and affect your credit score.

Another thing you can do to help your credit score might be to apply for new credit. That’s right: if you have very bad credit, you may be able to open a new bad credit account, such as a secured credit card, to give you an opportunity to start rebuilding credit. Having a new card that always shows a “current” payment history can be beneficial.

What if your credit is so bad that you have year or more of negative credit history?  If you find yourself in this situation, you may have to take more serious steps. If you are unable to make your credit payment, you may want to consider bankruptcy. A rule of thumb is:  If your debt if more than twice your gross takje-home pay, you probably will not be able to dig out of the hole (unless you get a second job). This is when you might consider bankruptcy.

If you have a year or more of bad credit, a bankruptcy will not make your credit history or score that much worse. Lenders are already looking at seven years of your credit history, and bad credit will make an impact even without a bankrtupcy.  By declaring bankrtupcy, it could help lighten your debt load and give you a chance to start over with a cleared-off credit report.  (Remember, though, that some things cannot be wiped out by bankruptcy, such as support payments or student loans.)  

Also contrary to popular belief, having a discharged bankruptcy on your credit report can lead to creditors offering you new credit (at higher rates). They know you don’t have any other debt once your bankruptcy is discharged.  As a result, your debt ratio, or the ratio of debt to income, is reduced when your debt is wiped out.  You can find yourself approved for credit cards, secured loans such as a car loan, and even some other personal loan products in as little as a year or two.

Filing a bankruptcy can be expensive however. Most bankruptcy lawyers will provide a free consultation up to an hour or so for the first meeting.  You can see for yourself whether bankruptcy is the right course of action for you to take.  But attorney fees for filing bankrtupcy can cost $2,000 and up depending on your particular situation.

What about credit counseling agencies? First, beware of any credit service that promises to improve your credit score by 100 or more points within 30-60 days. It is virtually impossible to do this legally. In addition, you can pay significant fees for these services.  Some non-profit counseling agencies will help you for free.  However, you should know that many of these agencies are financed by the credit card industry. That’s why they can provide services for free.  But they will mainly be concerned with helping you pay your credit card debt in full and on time. They will not help with secured loans such as car or house payments and will counsel you away from bankruptcy if at all possible, even if it’s the best option for someone with serious credit problems.

That presents an incomplete picture of what your options really are. They also may not tell you that registration with their credit counseling agency, and begin a repayment plan, also appears on your credit report, where lenders will see it and refuse to give yo credit. This is nearly as damaging as having a bankruptcy on your credit report!

Bankruptcy as an option is a very good choice for people who are not earning enough to pay all f their debt.  You may discharge debt or sometimes enter a repayment plan that is court-ordered, depending on your circumstances.  Either way, you have options that the credit counselors won’t tell you about, even though using their services can be just as detrimental to your credit.

The bottom line is that if you are trying to find a fast credit fix, there are absolutely steps you can take to see improvement in your credit score in the short run.  In addition, many credit products are still available to individuals with poor credit. Taking steps to fix credit in the short run can help you begin a program to improve your credit over the long run, and see improvement can motivate you to stick with your credit fix program.

1) The first thing you should do is get a copy of your credit report from all three credit bureaus and check to make sure all of the information found there is correct.  It’s possible that you could find that payment information is incorrect, that balances are reported incorrectly, or the debt you paid off is not showing as repaid on your credit report.  Thanks to federal legislation, the three major credit bureaus are much faster to contact lenders and get credit reports fixed.  They are required by law to respond within 30 days to any dispute you have with something on your credit report.  You will likely find that they get back to you much sooner than that with a resolution, and will work with you if that resolution is still not satisfactory.  

2) Prioritize your debt.  You should list all of the debt you owe and the interest rate that you owe for each on a sheet of paper or on a spreadsheet on a computer.  Once you have them listed, sort them in order by the highest interest rate at the top to the lowest interest rate at the bottom.  You should approach your payment plan by putting extra cash into the debt balance that is at the top of your list.  Try each month to put a little bit extra toward that high interest rate loan.  By paying a little extra on top of your monthly payment, you will reduce interest as well as pay off your balance faster.  Once that debt is paid off entirely, take the monthly payment plus the extra you were paying and apply it to the debt that is number two on your list.  This repayment plan is sometimes called a “debt snowball” and can help you pay your debt years faster than if you just made the minimum monthly payment on every debt each month.

3) Find some extra money each month to put toward your debt.  Whether it’s giving up the gourmet coffee every day, or taking a part-time job, it’s important to find a source of additional cash to put toward your debt each month.  Some families have a second or third income which they put entirely toward their debt repayment plan.  Other people take up an online business which makes them a little extra money each month, and they put all of those funds toward their debt.  A good example of this is selling items on EBay or Craigslist.com.  Tightening your budget is not that hard if you know you are spending extra cash on things that aren’t necessary, like extra meals at restaurants, manicures and pedicures, gourmet coffee, or any number of other similar expenses.  Take a look at your budget and see if you can’t find 5% to cut and put those funds toward your debt repayment plan.

4) Don’t open any new credit.  The best way to improve your credit score and get out of debt is to avoid taking out any more loans or opening any more credit card accounts.  Since everywhere you turn you’re bombarded with applications for credit, it’s difficult to say no, especially if you are having trouble living on your income alone.  Yet it’s important that when you are trying to dig out of debt, you don’t dig your hole any deeper.  You can get your name taken off mailing lists by going to the direct marketing association website.  For one dollar, you can enter your name and address and they will remove your name from all the mailing lists that go out to the major mailers each year.  It doesn’t hurt the environment either to reduce your junk mail delivered to your home.  

5) Be patient.  Recognize that improving your credit score and reducing your debt can take some time.  There are plenty of scams out there that promise to give you a brand new credit history overnight.  Usually this is not only impossible but illegal.  You can take small steps that add up quickly over several weeks or several months, and by following the tips above you can start to see an improvement in your credit score in as little as two months.  Remember that most lenders report to the credit bureaus on a thirty day basis but it can take up to three months for changes to appear on your credit report.  By being patient and focused on your goal, you will find that within six months you will start to see real changes and an overall improvement in your financial foundation.