Types

Most of the ways to restore bad credit involve correcting any poor financial management habits, but there are also some legal maneuvers to restore bad credit.

Legally Repairing Credit

If a credit report contains a false statement, the individual can take legal action to make the credit reporting agency verify the disputed claim or delete it from the credit report. Additionally, creditors may remove a negative item if the individual resolves the issue or simply asks.

Financial Responsibility

The only surefire way to restore creditworthiness requires the individual to start paying off debt, or at least make on-time payments. In addition, reusing dormant accounts---or establishing a new line of credit and using it responsibly---eventually raises a credit score.

Interesting Statistic

According to Liz Weston of MSN's Money Central, about 30 million American at any given time hold a poor credit history (bad credit scores are those under 620).

Warning

Although establishing new lines of credit helps show responsibility to lenders over the long term, obtaining several new lines of credit in a short time span hurts the credit score and impedes the attempt to restore creditworthiness.

Source:

LexingtonLaw.com: How can bad credit be legally repaired?

Fair Isaac Corporation: Improving your FICO® credit score

Weston, LIz: 7 fast fixes for your credit scores