Three ways to repair your credit

By Michele Lerner
Mortgage Credit Problems Columnist

If you're denied credit, you have a right to know why, and you're entitled to a free credit report. This first credit report is a starting point, a baseline to measure your progress toward financial fitness. Study your credit report, note any reporting errors and negative history that's dragging your scores down. Then start your credit repair by correcting errors and replacing bad credit history with on-time payments.

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These three strategies can speed up the credit repair process:

  1. Apply for a mortgage refinance or home equity loan. Complete the form on this page to see you qualify for debt consolidation, a home equity loan or bad credit mortgage refinance. Compare your mortgage offers -- depending on your qualifications, you might wrap your debts into a single debt consolidation loan, replace high-interest balances with a home equity loan, or refinance your mortgage to reduce your monthly expenses. Whichever options you choose, you'll need discipline to pay off debt and avoid new debt.
  2. Reduce your debt on your own. With the help of your credit report, create a budget and a debt repayment strategy. A credit counselor can help you decide what accounts to repay first. Getting current on all bills should be your first priority, then pay extra each month to reduce your balances faster.
  3. Set up a new payment system. If your credit score is low because of late payments, set up an automatic payment system or sign up for payment due alerts. You can't improve your score until you pays your bills on time. Keep in mind, though, that an automatic payment system may only pay the minimum due each month. Spend a few minutes with a credit card payoff calculator and you'll see how faster you'll become debt-free by paying more.

Each step you take to repair your credit improves your credit score over time. Pull a free credit report from one bureau every four months and track your progress. One day you'll be ready to apply for a new mortgage -- and be approved.

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