If your credit is in need of repair you are not alone. Tens of thousands of Americans have damaged their credit rating as a result of missed payments, high balances and other unfortunate circumstances. For some, poor credit results from inexperience. For others, it results from illness, unemployment or just bad luck.

Whatever the reason, bad credit must be repaired. The first step in repairing bad credit is to understand how and when you went wrong. Were you unable to adhere to your budget? Did you continue a high-living lifestyle after you lost your job?

Start by locking away your credit cards to help you get a handle on spontaneous spending. Don't cancel the cards or cut them up. Just hide them. Next sit down with your check book and your bills and make an honest inventory. Create a budget you can live with; one that allows you to make minimum payments on all your bills every month.
(See below for more information.)

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Contact your creditors. Hiding from creditors can be stressful for everyone involved so just don't do it. If you owe money it is always better to be upfront with your creditors, even if you are not in a position to pay them back anytime soon (or ever). Creditors will often agree to accept a lesser payment and to remove the negative notation from your credit file rather than risk receiving no payment at all.

If you disagree with something in your credit report outline it clearly in writing, explaining why you dispute the information and requesting a reinvestigation.

To ensure the correspondence is received, send it by fax, certified mail and standard first-class mail with a certificate of mailing. Keep copies of all documents including letters, envelopes and faxes and request a dated and stamped cash receipt and "certificate of mailing" for your files.

Staple everything together and file it in a safe place for safekeeping in the event that information removed from your credit report should mysteriously reappear at a later date.

When the reinvestigation is complete, the credit bureau must give you the written results and a free copy of your report if the dispute results in a change. If an item is changed or removed, the credit bureau cannot put the disputed information back in your file unless the information provider verifies its accuracy and completeness, and the credit bureau gives you a written notice that includes the name, address, and phone number of the provider.