You know the story: you missed a payment once, twice, thrice and bam! Credit score gone south. We all make financial mistakes one way or the other but the important thing is to recover from the bad rating as early as you can. Delaying it would worsen the problem and could impact your chances of securing credit in the future.
Your credit history runs up to seven years. All your spending and payment habits are reflected on that report.
If you have good credit rating, great! You just have to maintain your rating so that you won't have any problems should you decide to take out a loan or apply for a credit card. However, if you have bad credit then your eligibility for a loan, be it housing, auto or credit card, would be affected.
Your credit score is not really irreparable. There are ways to get around this problem if you act on right away. First things first, you must get to the root cause of the problem only then you will be able to take steps to fix your bad credit report.
Once you've identified the problem, you need to familiarize yourself with your credit report. You need to understand the information it contains, the credit bureaus providing these reports and the process of disputing negatives on your report, if such thing arises. For your information, you are entitled to one free credit report from the credit bureaus. You can order it online and they will mail the report to your address. If you discovered information in your credit reports which shouldn't be there in the first place, report it to the bureau right away to have it corrected and removed from your credit report.
If you have been in arrears in your mortgage or credit card payments, these have a huge impact on your credit score. In addition, if you have been endorsed to a collection agency and you have been avoiding them, it's time to deal with these companies directly. All the creditors want is to get paid. If you're having problems meeting the payments on time, it is best to work out a payment plan rather than ignore the problems. Keep in mind that creditors will not go away. They will keep following up with you until you settle your debts.
As for bankruptcies, there is little repair you can do in this case. You need to establish a good payment history to recover the negative rating you have incurred. This will take time but you have to be committed in fixing your credit report.