The tough economic situation in America has led to bad credit for millions of Americans. The effects of bad credit are many. Trying to get approved for a mortgage can be very difficult if not impossible. In many cases loan applications will be denied or will require a cosigner. This makes it very difficult to get a new car or to take out any type of personal loan. The good news is that in this age there are many resources you can turn to for help. The Internet provides tons of free information on credit repair. Taking the steps to rebuild your credit is not only a great decision but doesn't have to be that difficult either.

How to get started

The first step you need to take in order to begin building good credit is to order your credit reports. You can do this for free once a year by visiting www.annualcreditreport.com or by calling their toll-free number at 1-877-322-8228. The three main credit reporting bureaus Transunion, Equifax, and Experian must comply with the Fair Credit Reporting Act, or FCRA for short, and provide you with a free copy once a year.

Upon receiving your credit reports look over them carefully. Take note of any information that you feel may be inaccurate. You should investigate these items to determine if they are in fact incorrect. It's unfortunate but errors are made on credit reports frequently. Chances are if you don't find these errors no one else will, and they will lower your credit score. You need to dispute these items and have them removed from your credit report.

Take care of the past but remember to focus on the present and future

Removing inaccurate items is a great step towards increasing your credit score. But you can't spend all your time worrying about what you've done in the past. As you go through the sometimes lengthy process of disputing inaccurate items you need to focus on what you're doing now. Begin building good credit habits that you will use the rest of your life.

•If you are dealing with maxed out credit cards you need to bring them under the limit. Aim for 60 to 70% of your credit limit. This will indicate that while you still use your credit you do not rely on it. This will look good to the credit bureaus.

•If you foresee having trouble paying your bills it's in your best interest to contact your creditors. Many times they will be able to work out a temporary payment arrangement that may lower your interest or your monthly bill. This will give you some time to get your finances in order.

•Before signing any agreements be sure the check over all of the terms. The fine print can be boring and difficult to read because of how it's worded but you must understand what you're signing. If you find you cannot understand some of the conditions please review them with someone who can explain them to you. The Truth in Lending Act, or TILA, requires that all terms of the agreement must be disclosed. There is no excuse for not understanding what you're signing.

•Use your credit cards but be responsible with them. Make small purchases that you can pay for when the bill arrives. Relying on credit cards will get you into trouble and once his bills start becoming late your credit will suffer.

•35% of your credit score, which is the largest single factor, is made up by paying bills on time. By just paying by the due date on your bills you will not only increase your credit score but you will save money from late fees as well. Most creditors report monthly, making this one of the quickest things you can do to repair your credit.

The tips above will help get your credit score moving in the right direction, up. While it is definitely important to get past inaccurate items cleared you should start using the tips above today. Disputing errors on your credit report can be an ongoing process. Do not delay in building good practices from here on out. A professional repair service can handle the sometimes frustrating dispute process so that you can focus on today.