Credit 101

How can I fix my credit right now?

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Some of the simplest questions have the most complicated answers. For example, here's what Tom wrote in with today:

How can I fix my credit right now?

Whew…that's an eight word doozy of a question. Here's my answer, put as simply as possible:

1. Figure out what is breaking your credit first: A doctor can't prescribe without first knowing what's wrong. Take a look at your credit reports and credit scores. Are there negative records such as collection accounts? Late payments? High credit card balances? The "reason codes" included in your credit score should help point you in the write direction.

2. Run a test: Use's free Credit Score Compass tool to estimate how changes in your financial situation could impact your score. See exactly how your actions to improve could help or hurt your credit.

3. Do the right thing: It's boring advice but it really works with credit. The best thing you can do in most situations is to have at least one active credit or loan account that you use responsibly and pay on time each month. This new positive information will help "push" out the negative data. You can also often give your score a boost by reducing your credit card balances.

4. Don't sweat the negative stuff: Sorry, there isn't a way to get a reposession, foreclosure, collection account, judgment, late payment or lien off your credit report before the set 7-10 year expiration date. They'll lose negative impact as they age but can't be removed or undone. Focus your efforts on things you do have the power to change.

5. Avoid "quick fixes" when it comes to credit: This is related to #4. There isn't a way to cheat the system. So don't waste your time with credit repair and piggybacking rip-offs. If you want to spend money on improving your credit, invest in a secured credit card or a downpayment on a small loan to use responsibly.

What's your advice for Tom? Share your tips in the comments section below.

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