Forget Credit Repair Services. Fix Your Credit This Way Instead

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You might assume that the best way to fix your low credit score is to hire a credit repair company -- but you'd be wrong. These companies will charge you a fee to make the same moves you can make yourself, completely for free.

If past credit card and other borrowing indiscretions have left your credit score spiraling downward, here's how to fix your credit on your own.

You can fix your credit yourself -- here's how

Yes, it's true! You don't have to pay a credit repair service to take the following steps.

Dig into your credit reports

First, you need access to your credit reports. You have three, one from each of the three major consumer credit bureaus (Experian, Equifax, and TransUnion). You can get free weekly copies of all of them at AnnualCreditReport.com if you wish (that often is probably overkill, though).

Once you have your reports, take a closer look. Verify that your identifying data (name, address, and so on) is accurate. And then make sure the account details are accurate. Are all your credit cards and loans listed? Are the balance numbers reasonably correct (bearing in mind that your credit card issuers report to the bureaus once per month)? If not, you have recourse.

Have errors removed

Do you see false information on your credit reports? You can ask the credit bureau responsible to remove the errors (in writing). If you can show the information is wrong, the credit bureau has 30 days to comply.

Then the credit bureau is required to mail notices of the correction to anyone who checked your credit report within the previous six months, including potential employers if you underwent a credit check as part of a hiring process.

Negotiate with creditors

One aspect of credit repair that you might outsource to a credit repair company is negotiating with your creditors. But don't worry -- this is likely to be less scary than you may fear. Credit card issuers and other lenders just want to get paid -- something, anything, as soon as possible.

Take a deep breath and pick up the phone to negotiate with creditors yourself. Inquire about settling for less than you owe with a lump-sum payment, ask for a hardship plan to get more time to pay what you owe, or see about working out a payment plan that will waive late fees and any penalty interest you might've earned. You never know what's possible until you ask.

Consider a secured credit card

To give yourself a leg up on rebuilding your credit, you might want to apply for a secured credit card . With these, there's no risk to the issuer that you'll spend up to your credit limit and not pay it back -- because your credit limit is equal to a deposit you make when you open the account.

Use one of these responsibly -- meaning pay those bills on time, and ideally pay off the card every month -- and you may be able to "graduate" to an unsecured card in time.

Speak to a credit counselor

Finally, if you struggle with debt, budgeting, and managing credit, it's worth reaching out for help. But again, you won't go to a credit repair company for this. Instead, seek out a nonprofit credit counseling agency.

The National Foundation for Credit Counseling is a good place to start. You'll be paired with a counselor who can help you create a personalized financial action plan -- and ideally, learn how to avoid issues in the future.

Improve your credit habits going forward

The fundamentals of developing and maintaining good credit are all on you. While that might sound scary, I think it's empowering.

I might be biased here, though -- I had to rebuild my credit after a short sale of the first house I bought, and it took increasing my income enough to get myself out of debt entirely to end up with a credit score over 800. Focus on these moves to ensure good credit health going forward:

• Pay all your bills on time. Every single month. Payment history is the biggest part of your FICO® Score.
• Pay down debt if you can. The amount of credit you're using relative to how much you have access to is the second-biggest part of your FICO® Score.
• Apply for new credit sparingly. Aim to wait six months to a year between new credit applications, if you can.
• Review your credit report for errors regularly. If you spot them, have them removed.

In the future, when your credit score is higher and you no longer have to worry if you'll be approved for that new credit card or loan, you'll feel great about taking these steps. Start fixing your credit yourself today.

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