Bad credit can have a huge impact on your life. It can be next to impossible to buy a car or home, or even to get a credit card or cell phone. Fortunately, it is possible to fix your credit score. It takes some hard work, and a lot of commitment, but it is a goal that is worth the investment.

The first step to repairing your credit is to request a copy of your credit report from the three credit agencies: Equifax, Experian, and Transunion. These are available online, and can be requested, for free, once a year. This step is important because it allows you to review your credit history to date, and to see where you need to make improvements. It is essential that you get all three because many businesses only submit your payment information to one of the companies. By reviewing all three reports, you get a full and accurate picture of your credit.

Once you have the credit reports, then next step is to review them for any errors. This may include payments you made that were marked as late or accounts in your name that you didn't start -- a sign of identity theft. You should also note which accounts are late, any credit cards that are maxed out, and any accounts that have been charged off or sent to collections. A charge off means that the credit company doesn't expect that you will pay them back, and that they no longer want to count the debt in their accounts. This doesn't mean that you don't still owe the money. These accounts still need to be paid off.

After correcting any mistakes in your credit reports, it is time to start paying accounts off. While this is important, it shouldn't come before paying any bills you are regularly paying right now. Don't add more problems to your credit. You should start by paying off overdue accounts, and then the charged off accounts. Contact debt collection agencies to work out a payment agreement with any accounts that have been sent to them. Finally, resume payments for maxed-out credit cards. Don't take on more payments than you can handle financially. It took time to get into debt, and it will take time to get out of it.

Once your debt has been paid off, it is time to start establishing good credit. Get a credit card with a small limit, and make regular payments. If you don't qualify for a credit card, try for a store credit card or a secured credit card from a bank or other financial institution that you have a good history with. Multiple inquiries from businesses checking your credit (for credit cards and such) takes a negative toll on your credit. Only apply for one credit card to minimize the number of inquiries.

If you need further help to fix your credit, it may be wise to contact a credit counseling service. A credit counseling service can help you to develop a budget, and try to set up better terms with creditors. Asking for help if you need it can be a great way to start repairing your credit. Taking even a few small steps in the right direction is better than doing nothing. Even if you can't make big payments right now, it is important to begin working towards developing good credit.