The first step is understanding how credit works and begin making a plan.

• Lock away your credit cards. Now, do not close your accounts just yet. If your credit rating is poor you may have a difficult time getting new cards. The first step is to stop using them and stick to your immediate goal of repairing your credit rating and getting out of debt.
• Find out where you stand. No one likes to focus on budgets and net-worth statements but it is a necessary first step, just like getting on the scale before you begin to diet. It will help you to measure your success.
• Make a plan. If you are going to repair your credit paying your bills on time is a must! That means you need to pay at least the minimum balance on each bill within 30 days. If this is not a possibility you may want to consider credit counseling.
• Negotiate with creditors. Most creditors will renegotiate terms with you if you are having trouble paying bills. Write a letter to the creditors describing your problem and requesting reduced payments. Then stick to your new schedule.
• Add pertinent information to your credit file. Your credit report may be damaged as much as the information that is omitted as by the information that is found there. Although creditors are not required to report information to the credit bureau, you are entitled to add information that you think will help your rating. According to the law, you are allowed to write a letter of up to 100 words involving any credit dispute. This might include details of loans that were paid on schedule, active accounts where you have a good record, salary increases, and information regarding your mortgage, car loan or the settlement of disputed bills.