How to Repair Ruined Credit

Order a copy of your credit report from each of the three main bureaus: Experian, Equifax and Transunion. Each one retains a unique credit file for you, so you will need your report from each bureau. You can order one from each agency online for free once a year.

Review your credit files carefully, highlighting the negative items. Your credit report will be broken down for you in categories. Focus on the category that states "Potentially Negative Items." Also look for errors in your name, work and addresses.

Draft a letter to send to each credit bureau asking them to remove up to five negative items. Simply tell them you are disputing the information. If the information is correct and can be verified, it will remain. If they cannot verify the item or the information is incorrect, the items will be removed. Include a copy of your driver's license or identification and mail these letters via certified mail at the post office. Keep receipts and returned signature cards. The bureaus must respond within 30-45 days or they have to remove those disputed items according to the Fair Credit Reporting Act, Section 611.

Look for ways to build positive credit. If you have any open loans or credit cards that are satisfactory, make sure you are paying them on time. If you need to, find a credit card that is offered to those rebuilding credit. Positive trade lines reporting on your credit file will help your credit score immensely.

Negotiate to pay off collections and charge-offs that you can if they are under two years old. If they are older than two years, dispute them to have them removed. For example, if you have a $150 doctor bill in collections, call the collection agency and offer to pay in full in exchange for a deletion on your credit file. They do not have to do this, but many will in an attempt to collect the debt.

Negotiate to pay off balances for a fraction of amount owed. If you have a credit card debt of $3,000 that you cannot pay, call them and offer to pay them 50 percent up front if you can. If you have been unable to pay, they will work with you to try to collect something. If you were to file bankruptcy or ignore the debt, they would receive nothing, making it in their favor to settle for a lower amount.

Repeat Step 3 every 45 days until your credit report has no negative information on it. Part of this process of removing negative information means not collecting any new negatives. Pay everyone on time, and keep balances as low as possible.