When it comes to credit, this is one of the most asked questions:  How do I fix my credit?  There are plenty of companies that advertise they can repair your credit in turn increasing your credit score.  Seems simple.  Pick up the phone, dial the number, pay the fee, and all of your credit woes are solved.  It usually doesn't work out quite like that.

Bad credit will not just "go away" by paying someone to remove it.  Sure, there are legitimate companies that can help get rid of inaccurate information on your credit report.  But these companies cannot get rid of mistakes you might have made in a previous life.  You know the previous life where you ran up credit cards to $50,000 or filed bankruptcy 3 times because of divorce, business failure and your dog's emergency surgeries (those are dang expensive!).

Mistakes on your credit report, however, are a different.  If you have errors on your credit report, you, or a company you hire, can have these erased, which will improve your FICO score.   If you decide to do it yourself, there are a few things you need to know.

The first step in repairing credit report errors is to find out what's wrong.  As a consumer, you are allowed one free credit report per year from the 3 major credit bureaus:  Experian, Equifax, and TransUnion.  Get a copy of each and find out what they are reporting.  They will be different.  You may see an account on one, but won't be on the other two and vice versa.  After you get all 3 the first year.  Another strategy to help monitor through the year is to get one free report every three months from one of the three bureaus.  For example, get the free report from Experian in January, Equifax in April, and Transunion in August or September.  Then start over the following January.

Once you get the reports, here's what you should be looking for:

• Late Payments:  There should be no late payments over seven years old.  If there are, contact the bureau and ask them to remove it.  35% of your credit score is based on timely payments.
• Collections:  There should be no collections older than seven years old that show on the report.  It's a good idea to file away your credit reports for seven years, so you can prove when a collection item was added.
• Payment Records:  All paid-in-full installment loans and collections that have been paid in full (or if they were settled for less than was old) should show a zero balance.  Collection companies don't always update the bureaus once they have been paid or settled.
• Unidentified Accounts:    You should be able to identify each credit account.  If you can't, you should contact the company directly to compare social security numbers on the account.  If they don't match then request a "validation of debt", which will give you details of the account holder.  In case of identity theft, then you should ask for a fraud affidavit from the creditor.  If it were me, I would also file a police report.
• Original Dates:  Length of credit history is 15% of your credit score, so you should be sure the original opening date is correct.  It could be wrong if there was a lost or stolen card or if two credit card companies merged.
• Available Credit:  Your debt compared to available credit counts for 30% of your score.  Make sure the credit limits on the report match the limits on your statements.  Try to keep balances under 50% and if you can keep them under 30%, it's even better for your score.  VERY IMPORTANT:  Think twice before closing a credit account or credit card.  If you do, it will decrease your available credit, which most likely will lower your score.  So, don't close the account.  Just don't use it as your emergency fund.  Take Dave Ramsey's advice and start saving.  Set up an "emergency fund" account and quit using the credit cards.  If they are too tempting to use, then cut them up.  Just don't close the account.  Unless, like Dave Ramsey, you don't care what your credit score is and you just pay cash for everything.  In that case, what the heck!?!
• Types of Accounts:  Make sure your accounts are labeled properly.  In other words, a home equity line should be recognized as a second mortgage, not just a "line of credit".  If they don't match, contact your creditor.
• Reason Codes:  Each bureau will provide "reason codes" for why your score is what it is.  Keeping an eye on these and making the necessary changes can improve your score over time.  If you already have a good score, then these codes are less important.

The key to to good credit is staying proactive by periodically reviewing your credit reports.  If your score is 680 or higher, then having minor dings removed may not do a lot for your score.  Finding and fixing errors on your credit report will most definitely help your score and help you have a higher credit rating.  Otherwise, time is one of the  other things that can help you overcome past credit mistakes.  As always, never quit, and keep pressing forward until your credit score is respectible.

Check out the resources below for more help with your credit woes.

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