Having bad credit can be a very uncomfortable problem. Not only can bad credit raise your insurance premiums, disqualify you for loan approval, and make it extremely difficult to get an apartment, but it can also cause you to fail to get certain jobs. This is because insurance companies, lenders, landlords and employers all commonly use your credit rating as a measure of credibility when evaluating you. Further compounding the problem is the fact that as many as 5% of consumers have errors on one of their credit reports that are no fault of their own. These credit rating errors can lower credit scores significantly.

However, even if your credit score is very low—due to a series of missed payments, defaults on loans, other undesirable financial behavior, or credit rating errors—there are still a number of things that you can do to repair your credit.

1. Identify the Problem

Your credit score could be going down and you may not even know why. If this is the case, then the first step is to simply try to figure out what the problem is. This could mean going through your credit report or your financial records to try and figure out if there is a payment that you are defaulting on that you forgot about, or examining your credit report to see if a mistake has been made.

For example, if your credit report says that you have defaulted on a credit card that you don't even have, this could be a very costly mistake that is driving your credit score down.

2. Avoid Missing Payments

Missed payments or defaulted loans are one of the things that can hurt your credit score the most. So, the fewer of these you have, the better.

A single late payment can stay on your credit report for as long as seven years. This is a heavy price to pay for being disorganized. So, avoiding missing payments can help get you back on track. Also, if you are being contacted by debt collectors, it is wise to take their calls and to pay them what you owe. Ignoring debt collectors and refusing to pay what you are legally obligated to pay can cause serious credit issues.

3. Grow Your Positive Credit

If your credit score has gone down significantly, then it might be difficult for you to obtain certain types of credit (for example a credit card with a high limit). However, this doesn't necessarily mean that you will be disqualified from all types of credit.

In order to start growing your positive credit, you could take out a credit card with a smaller limit, such as $1,500. Once you have this credit card, you can make small purchases on credit and simply pay your bills on time. Doing this can add positive credit to your score, and this can balance out some of the negative credit that may have already accumulated on your report.

However, in order for this strategy to work, you also need to avoid missing payments on other sources of credit, such as loans or other credit cards.

4. Resolve any Disputes or Errors on Your Credit Score

Errors on credit reports can lower credit scores by as much as hundreds of points. For this reason, if you have errors on your report, and if you know that the information is inaccurate, then it can definitely help your score to have these errors removed.

However, getting these errors removed can be a complicated process. Due to this fact, many people hire lawyers to help them deal with credit rating companies. A credit repair lawyer can investigate your credit report to look for mistakes. They can then work with the credit rating company to try to have these errors fixed.

In addition to helping you fix credit errors, a credit repair attorney can also help you negotiate settlements with lenders, represent you in court if you are sued by a creditor, and can negotiate the removal of certain negative items from your credit report.

Bad credit is a financial hazard that is best to avoid if possible. However, if your credit score has dipped lower than you want it to, you can increase your score by identifying the problem, avoiding missed payments, growing positive credit, and resolving any disputes or errors. Attorneys are also available to help you with this problem if you need professional help.