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Life can be a bit complicated with bad credit. It’s not impossible to live with bad credit, but it certainly is tougher than if you have good credit. With bad credit you may find it difficult to get approval for new credit products such as credit cards or to be approved for a loan. Although there are personal and business loans for bad credit, this will offer you fewer options. Unfortunately, there is no easy fix for bad credit either, but that doesn’t mean you should be disheartened. In fact, here are 5 simple steps you can take to repair your credit score on your own.

1. Understand Your Credit Score

Before you can begin to repair your credit, you need to know where you stand. Get the latest copy of your credit reports so you can see all the details and which decisions you made in the past that led to your bad credit rating. Specifically, it will show you the negative listings that are lowering your credit score.

2. Check the Reports and Dispute Any Errors

Once you have your credit reports, you need to go through them thoroughly. These can be long and daunting for people who have a long credit history, but it is worth taking the time to go through them properly. At this point, you can dispute any information that is not accurate.

3. Pay Past Due Accounts

Your first priority should be paying your past due accounts. Your payment history makes up 35% of your credit score so past due payments are essential if you want to get out of bad credit. Contact your creditor to see if you can work out a solution to help save these accounts from being charged off (180 days past due). They may be willing to spread out the payments or waive the late penalties if you contact them in person. A charge-off status will be reported for 7 years so you need to avoid these, but once there, aim to pay them off after past due accounts.

4. Focus on Your Credit Utilization

Your credit utilization is your ratio of debt to credit and it makes up 30% of your credit score. Having high account balances will hurt your credit score and you need to work to bring the balance down below your credit limit. For credit cards, your credit score will reflect positively on credit card balances that are lower than 30% of the credit limit.

5. Pay Off Loan Balances

The higher your loan balance, the worse it is for your credit score. Work out which loans have the highest interest rates and the worst terms and work to pay those off first. Once your credit card balances are low, move onto other loans, including business loans for bad credit.


It can take months, or even years to repair your bad credit, but it can be done with patience and diligence. And, it is well worth it if you ever plan to apply for a loan, such as a mortgage.

Daniel Lewis
Daniel Lewis is an MBA accredited investment professional who wants to assist small business owners to gain access to finance. After going through many channels for funding, Lewis has found that getting the first loan right is vitally important for future success.