In today’s world, it's crucial that you understand how your credit reports and credit scores affect your financial situation. Credit scores determine whether you can obtain credit and what you pay for credit cards, auto loans, mortgages and other kinds of credit. They can also be used in deciding whether you get accepted into an apartment community and whether you get a job.

So, where do you start if you have low credit scores? How can you repair your credit score? First, you need to start by grabbing a copy of all 3 of your credit reports. You need to know exactly what is being reported about you and exactly what your scores are. After you get your reports, you need to find out which items are lowering your scores.

It’s fairly easy to see which items are damaging your reports. Most reports are divided into sections which make it fairly easy to tell which accounts are considered negative, but not all reports are. So, it’s important to go through and highlight all of the account hurting your scores. Once you have this information listed, you can start to make a plan on how to eliminate or improve these accounts.

Some accounts won’t be able to be improved. They will need to be removed. But, other items, like accounts with a late payment history can be updated to make the account positive. You can contact the lenders directly to see what it will take to get them repaired. If the creditors are not willing to work with you (unfortunately most of them aren’t) then you will have to dispute the accounts directly with the credit bureaus.

Under the Fair Credit Reporting Act, you have the right to dispute any information on your credit report. This is simply done by writing a dispute letter to the credit reporting agencies. Once they have received your letter, they’re required to verify the information with the information provider. They have 30 days to do so. If the information cannot be verified, it must be deleted.

After you've cleaned up your credit report, the next step is to get positive information reporting. Acquiring new positive accounts is just as important as deleting negative accounts. One of the best ways to do that is by getting a secured credit card or an unsecured card from a local credit union. The interest rates are usually pretty high on secured cards and the credit limits pretty low, but that’s ok because you are strictly using these cards to build credit. Keep your balances at 30% of your credit limits or below.

Get more free credit repair tips at AAACreditGuide.com.