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It’s not as complicated as it seems.

Credit can be your best friend when it is in good shape and your worst enemy when it is not. While it would be wonderful if everyone had the ability to snap their fingers and fix their credit, most of us have to take it one step at a time. Here are some simple steps to fix credit scores.

Check your credit

You cannot make a plan of attack if you do not know what to attack. Before you make another move, get your credit report. You can do this for free once a year through or within 30 days of being turned down for credit.

Prioritize your most important debts

Once you have your report in hand, it is time to prioritize. You will often read that you should put your debts in order from smallest to largest or largest to smallest. However, there is another way that will make a bigger impact on your credit if you can only make small moves.

Debts that are reported to the credit bureaus have the largest impact in the first two years that they are on your credit report. Locate these and label them as number ones. You can then put these in order from smallest to largest and start making payments.

The difference in paying a debt in full and paying a settlement amount is only about two points on your credit, so settling you debts is really not going to hurt you. 

Put the rest in order

Most negative debts are supposed to fall off of your credit report seven years after the first date of delinquency. You can find the date that this is supposed to happen for each debt on your report in that debt’s details.

Put the ones that are due to come off soon on the back burner for now. You can pay them after you clean up your credit report.

The remaining debts can be put in order from smallest to largest to be paid after your “number ones” from the previous step.

Lower your debts

Starting with the first debt on your list. Look for the creditor’s contact information and call them. Explain that you are looking to pay off your debt and that you want to know if you can get a settlement.

Most of the time, the creditor will gladly agree, especially if much of your debt is interest or fees. The difference in paying a debt in full and paying a settlement amount is only about two points on your credit, so this step is really not going to hurt you.

Photo Courtesy: [Unsplash / Berkeley Communications]

Knock them off one-by-one

Diligently work through your debts until your list is cleared. Over time, you will find that your baby steps made a massive change to your credit– as long as you do not get into any new debt in the process.

Ways to make it go faster

If you are not seeing the type of progress you would like to see, you should find a way to pay more. You may consider the following:

  • Consolidate your debts– If you can get a personal installment loan, you can pay your debts upfront and make small monthly payments on the loan. This can save you a lot of money if your debts are constantly gaining interest or fees.
  • Work extra hours- Ask your boss to let you pick up an extra shift or two each month and put that money directly towards your debts.
  • Pick up a side hustle- Find something you are good at, such as baking, cleaning, writing, and so on. Turn it into a side business that you use to fix your credit.
  • Sell your stuff- Declutter your house and sell your items in a yard sale or online on Craigslist or the Facebook Marketplace.

A deeper dive- Related reading from the 101:

Some more information on consolidating your debt.

What to do with student loan debt.

Steps to take if you have medical debt.