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Whether you have overdue loan payments, years of high credit card balances, or accounts turned over to collections, there's always a way to repair your credit score. It's worth fixing it sooner rather than later. Poor credit may keep you from being approved for new lines of credit, or cost you money as you are forced to pay higher interest rates.

If your credit score needs some damage control, it's easy to be tempted by scams that promise a quick fix. However, the best way to revamp your credit score is to do it yourself. Don't fork over cash to companies who promise an overnight credit score miracle -- repairing your credit is a job you can handle yourself with these five steps.

1. Do Your Research

Your credit score is a number between 300 and 850. It helps lenders understand whether you're low-risk enough for the best credit cards and lowest loan rates. Plus, you can't start repairing your credit without knowing where you stand!

To start, you'll want to get copies of your full credit reports from all three major bureaus: Experian, TransUnion, and Equifax. You can request your reports for free, once per year at annualcreditreport.com. Steer clear of other sites, which might require you to pay for a report even though they claim to be free. 

If you prefer to use apps, there are a few reputable choices to pick from. Credit Karma and Credit Sesame are both trustworthy options for free credit score tracking. An app can help you see your credit score start to tick up over time, which is a great motivational tool!

2. Dispute any Errors

Once you have your credit reports in-hand, go through them in detail. While bad credit is most likely caused by your own habits, it can also be caused by errors. If you find any errors, it's worth your time to get them resolved.

As you go through your credit report, review the list of your credit cards, outstanding debts, major purchases, and loans. If you see any mistakes or items that look questionable, make a copy of the report and highlight the error. Then, double-check the error against your own records. You'll need proof, like a copy of your bank account statement, to get the credit bureau to fix the mistake. File any disputes online following the FTC's advice.

3. Establish and Automate Your Budget

Repairing your credit also means changing your unhealthy habits. Start by making a budget and prioritizing your regular monthly expenses, like rent, insurance, truck payments, and other necessities. Getting your spending under control is crucial if you're going to succeed with the final two steps.

Budgeting doesn't have to be boring or complicated though. You can work with an ATBS business consultant to create a personalized profit plan (budget). As you make your profit plan, set up automatic payments for utilities or other bills so that you can avoid late payments. Paying all your bills on time is the single most important aspect of building good credit. Missing even a single payment can do further damage to your score. 

4. Pay Off Outstanding Balances

With your freshly-minted budget, you'll have more room to start chipping away at your outstanding balances. Start by paying off credit cards that are maxed out or close to their max. This is because your credit score is partially based on the amount of available debt you utilize. For example, if you charge $1,000 on a card with a $2,000 limit, you've used 50%, which is better than charging the same amount on a card with a $1,500 limit. 

As you pay off each card, you might be tempted to close the account completely. It's counterintuitive, but leave the credit cards open! Each card contributes to the total amount of available credit, which also impacts your score. If you really need to eliminate the temptation, it's best to take the card out of your wallet and store it at home.

5. Stay Away From New Credit

As you take the steps to repair your credit, you'll need to resist the urge to open a new credit card. Even if your score is starting to improve, opening a new card can hurt in a couple different ways. First, the "hard inquiry" from your application will show up on your credit report. Having too many of these inquiries in a short period of time can hurt your score. Second, a new credit card decreases the average age of your accounts. Don't undo all your progress by adding another card or loan too soon!

Repairing your credit is always a worthwhile journey. It could take months or even years, but it can help you in the long run. If you’re planning to purchase a new home, it can reduce your interest rate and the overall cost. No matter how long it takes, you can do it!

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