Once your credit reports are reflecting accurate information, the only way to improve your credit rating is to make the right choices for the next two years. Yes, I said two years. Your credit rating is a living entity. It is never static. Choices you make today will affect it for two years or more.

The bad news is that accurate damaging information may be reported for seven years, or in the case of some bankruptcies, ten years. The good news is that your credit score is heavily weighted to the last 24 months. That means that you can improve your score dramatically over the next two years just by being good.

Get on a budget. Ooooh, I just said the "B" word. Tough, get used to it, because a budget is the most important tool you have to regaining good credit. You need to know exactly how much you can afford to spend each month to avoid going into debt. Cut out anything that isn't necessary for life. Get creative with ways to save money. If you need ideas, get a copy of my book, How To Keep More Of What You Make. In it are over 135 specific tips on saving money, and paying of debt. You can order your copy by following this link.

Use the money you save to pay down debt. Always pay more than the minimum payment. Minimum payments are designed to keep you in debt, not to pay it off. In fact, if you make two payments one month, some cards will show a minimum payment of zero the next month. Why? Because they don't want you to pay off the card.

Example:
If you have $10,000 on a card at 8% and your minimum payment is 1% of the balance owing, it will take over 30 years to pay off the debt, and you will pay over $13,000 in interest charges. If you have a high interest card the news is even worse.

If you have credit cards, ask them to increase your credit limit (double it if you can) but don't increase your balances. This will help your credit score to go up because it lowers the ratio between your credit limit and your credit balance. This is critical: DO NOT increase your balance. Keep your balance to limit ratio under 50%.

Be aware of the interest rates you are paying for credit. When you get an offer to move a balance from a higher interest card to a lower interest card, do it! If your credit is still good enough to be getting 0% interest offers, transfer balances to those cards, and make big payments. This will reduce your debt quicker since you won't be paying interest for the introductory period.

Don't close out a lot of accounts at once. Even if your cards are paid off, and you don't use them, don't close them right away, this makes lenders nervous, and can cause your score to go down.

Borrow against your 401k and pay down high interest debt. If you have $5000 on an 18% card, and you can borrow that amount from your 401k account, do it! You'll pay yourself back at a much lower interest rate.

If you need to establish good credit, but no one will lend to you, get a secured credit card. You will have to put $500 into a holding account, and your limit will be just $500, but it will give you the opportunity to establish a new record of on-time payments.

Get caught up with your payments. If you are behind with a creditor, call them and make arrangements to get caught up. Most creditors have programs to help you get current.

Keep the faith. Don't get discouraged. Eventually your bad credit drops off, and in two years you can have better scores, and in seven years, if you make the right choices now, you could have pristine, perfect credit with scores in the 800 range. Then, creditors will jump in front of your car to give you low interest loans.