Here's the real problem with bad credit: No matter how much you'd like to escape its consequences, they are just about impossible to shake. Bad credit makes getting a loan either expensive or impossible. It can potentially cost you a job. It may narrow your options considerably when it's time to find a place to live.

In part one of "How Can I Fix My Credit?" we discussed the first moves to make when attempting to repair your credit -- how to get your credit report, how to contest errors and how to understand a debt timeline. In this companion piece, we're going to discuss the next practical steps to take. By following the advice outlined in both articles, you'll have the tools to repair your credit as painlessly as possible. 

Now let's move on to our next steps.

Create a Realistic Repayment Plan

When it comes to fixing bad credit, there's no magic bullet solution. It requires careful and deliberate execution of a plan to improve your credit score. One of the cornerstones of that plan should be an effort to pay back your creditors in a consistent and timely fashion.

The more debt you pay off, the higher your score will rise. Additionally, paying down your credit card balances will also boost your score, as the amount of available credit you have is one metric the bureaus use to assess your creditworthiness. This concept is called "credit utilization," and it is the second most influential factor in your credit score.  

Look for New Ways to Build Good Credit

While it's true that applying for credit in multiple places will often ding your score, opening just one new account also offers you the chance to build good history. While credit cards available to those with checkered histories often come with high-interest rates and low limits, they do provide you with an opportunity to show that you're capable of making consistent and timely monthly payments. This is important because timely payments are the single most influential factor when tabulating a credit score.

Do this long enough, and you'll receive credit offers with less onerous terms -- thanks to your improving credit score.

Avoid Credit Fixing Scams

Unscrupulous operators often tout the ability to "fix" bad credit in 30 days or less. This is an outright fantasy. Unless all of your bad credit indicators are the result of contestable mistakes, there is no way to fix your credit on that kind of accelerated timeline. 

Not every organization offering credit repair assistance is a scam, however. There are some non-profit agencies that can offer useful guidance. It’s important to remember there is almost nothing that an outside entity can do for you that you can't do for yourself, in terms of restoring your credit. Anyone offering an easy, quick path to good credit is peddling a dream. 

Know Your Rights

Those with bad credit often have to deal with extremely persistent collection agencies. These groups aren't acting with your interests in mind -- they're trying to get the best deal possible. They are also highly skilled negotiators who won't hesitate to get you to commit to unfavorable terms.

By knowing your rights as a consumer, you can level the playing field and settle your debt on more attractive terms. This, in turn, will boost your bottom line, which will ultimately make improving your credit score easier.

The Takeaway

Bad credit is like the proverbial bad penny -- it just keeps turning up. By following the steps listed above, you can improve your credit as quickly as possible -- something that will make life much easier.