How to Repair Bad Credit

Where bad credit comes from, and why it matters

Bad credit (sub-600 FICO) usually traces to one or more of: missed payments, high utilization, charge-offs, collections, or bankruptcy. The cause matters because each has a different repair playbook.

Repair is not magic; it is a systematic application of the FICO model in reverse. Pull the most recent reports from all three bureaus, identify the heaviest-weighted negatives, and address them in priority order.

Step 1: Pull and audit your credit reports

1. Visit annualcreditreport.com and pull all three reports (Equifax, Experian, TransUnion), free weekly.
2. Make a spreadsheet of every account with: status, balance, credit limit, payment history, and date opened.
3. Flag any account you do not recognize as potential identity theft.
4. Flag any late payment older than 7 years, those should have fallen off and can be disputed.
5. Flag any duplicate collection (same debt sold to multiple agencies).

Step 2: Dispute errors aggressively

Roughly 25% of US credit reports contain at least one error. Each bureau is required by the Fair Credit Reporting Act to investigate disputes within 30 days. Use each bureau's online dispute portal; include screenshots or documentation when possible.

Common winnable disputes: accounts that are not yours, balances that do not match, late payments that were actually on time, and old negative items past the 7-year window.

Step 3: Bring everything current

Late payments hurt more the more recent they are. The single fastest way to start the recovery is to bring every open account current today and never miss another payment.

If you cannot afford the minimums, call each issuer and ask about hardship programs. Most major banks offer 3–6 month reduced-payment plans that prevent further reporting damage.

Step 4: Crush utilization

• Pay down revolving balances to under 30% of each card's limit, then under 10% over the next quarter.
• Request credit-limit increases every 6 months on existing cards (soft-pull only with most issuers).
• Pay before the statement closes, not just before the due date, this lowers reported utilization.
• Do not close old cards even if you stop using them, the available credit helps utilization.

Step 5: Negotiate with collectors strategically

Collections under $500 are no longer reported on FICO 9 and FICO 10 scores, older scoring models still count them, but most lenders now use newer versions. Pay these last, if at all.

For larger collections, request 'pay-for-delete' in writing before paying anything. Get the agreement in writing, phone promises are routinely broken. If pay-for-delete is refused, settling for less than full balance still helps because the account moves from 'unpaid' to 'paid collection.'

Step 6: Add positive history

1. Open a secured card if you have none open, establishes new positive history immediately.
2. Open a credit-builder loan from Self or a credit union for installment-mix diversity.
3. Sign up for Experian Boost and a rent-reporting service.
4. Become an authorized user on a family member's oldest, lowest-utilization card.

What credit-repair companies actually do (and don't)

Credit-repair companies charge $80–$130/month to file disputes on your behalf. Everything they do is something you can do yourself for free. The Credit Repair Organizations Act prohibits them from charging upfront, any company that asks for money before performing services is operating illegally.

Avoid any company that promises to remove accurate negative information. That is not legal and not possible.