You can repair your credit rating and increase your credit scores by taking the appropriate steps. Knowing this simple fact is half the battle. There’s plenty of misinformation being tossed around out there about credit repair. Once you are determined to find out the truth and learn your federal rights under the Fair Credit Reporting Act and how the credit system works, you are on your way to living a life of financial prosperity.

The following are a few steps you can take to repair your credit:

Get Your Credit Reports

Obtain a copy of your credit reports from the 3 major consumer reporting agencies. You will also want to know what your credit scores are.

Evaluate Your Credit Reports

Once you have your reports, you’ll want to make sure all the information is accurate. There are mistakes in about 80% of all credit reports.

Dispute Questionable Items

If you find an inaccuracy or any negative accounts that you are unsure of, dispute it with the credit bureaus. If the creditor can’t verify the account they must delete it from your reports.

The consumer reporting agencies get thousands of disputes each day. They are dealt with by minimum wage employees who are given a very short time to investigate. So, if the negative accounts don’t get removed on the first dispute, don’t despair. It may take a few rounds of letters before the CRAs remove the account. Be patient and wait at least 30-35 days between disputes.

Pay Off Bad Debt

Paying off your most recent past due accounts can increase your credit scores. Be careful making payments on accounts that are more than a few years old as paying them can bring your scores down even further by making the negative account current.

Negotiate with the creditor to update the account to "paid as agreed" or remove the account BEFORE you pay it. It’s much more difficult to get the creditor to update or remove it after you pay it because you don’t have as much leverage. However, it’s sometimes easier to dispute paid accounts with the CRAs.

Credit Utilization

Another important part of raising your credit scores is to keep your existing balances below 35% of your credit limit. You’ll also want to minimize the number of inquiries you make by not applying for credit unless absolutely necessary.