Out of the blue, poor credit often sneaks up on consumers and strikes them like a bolt of lightning where it hurts most- in their pocketbook. The triggers for bad credit reports are diverse, ranging from unemployment, illness, and divorce to an insolvent business and irresponsible spending. A negative credit rating adversely impacts consumers across many fronts. It raises their insurance rates and makes it more difficult for them to land a job or promotion and to obtain housing. It can even lead to a garnishment of their wages. Fortunately, poor credit is not irreversible, and numerous avenues exist for debt-stricken consumers to re-establish a good rating and reclaim their purchasing power. What follows are eleven effective methods for fixing credit:

1. Correcting errors on credit reports

To improve your credit score, consumers should 1) obtain a copy of their credit report from the three credit bureaus (Experian, Trans Union, and Equifax), 2) report any discrepancies or inaccuracies to their creditor, and 3) request that the credit reporting agencies and/or the creditor that communicated the error correct the information. If there are any outstanding debts on the report, consumers should pay them as quickly as possible, starting with those featuring the highest interest rates.

2. Setting up a payment plan

A second way to fix your credit is to contact creditors and establish a repayment plan with them. They will negotiate interest rates, balance payoffs or lower payments with borrowers. Upon repaying their debt, consumers should mail a copy of their settlement letter to the credit bureaus so that they would update their credit report.

3. Implementing a debt consolidation plan

Individuals drowning in debt should consult a credit counseling agency for purposes of working out a credit debt consolidation program. With the help of a credit counselor, consumers may consolidate their debts to lower or remove finance fees. This will improve credit score and reduce their monthly payments by as much as 40 percent.

4. Keep a few credit accounts open

Since the duration of credit history is the third most significant criterion in a borrower’s credit score, consumers should keep open one or two of their oldest accounts. Closing too many accounts at once would reflect poorly on their financial health.

5. Liquidating assets or selling valuables

6. Eliminating unnecessary purchases and utilizing the remainder of earnings to repay debt

7. Maintaining the same occupation and residence

8. Paying bills on time

Comprising more than one-third of consumers’ score, payment history ranks as the top consideration in their credit score. To fix credit score and qualify for better ratings, consumers should pay rent, mortgage, utilities, and their credit card balance in a timely manner.

9. Obtaining a co-signer on a credit card or small loan to help them rebuild credit

10. Applying for a Credit Union loan

Upon paying off their debt, consumers can apply for a credit card or a loan from their Credit Union. By making payments on the Credit Union loan from their savings account, they can rebuild a positive credit history.

11. Applying for a secured credit card

To improve credit, individuals who fail to qualify for a traditional credit card should consider applying for a secured credit card. The applicant supplies the funds up front as collateral, and his or her card appears as a credit card on the credit report. When utilized judiciously, secured credit cards can help consumers reestablish their credit.