Note: This is the fifth in a series of columns on credit which has previously covered how to get your credit report, how to read it, how to fix it and how to avoid experiencing your own credit horror stories.

How do you improve a bad credit history? --Marc Burris

Marc,

If you have done serious damage to your credit history, you can take your time shopping for a house.

Most negative information will stay in your credit record for seven years. Bankruptcies can hang around for 10.

To start rebuilding your record, you'll first need to clear any bad debts and outstanding balances and start making regular payments to your creditors. Then you'll have to wait and wait and wait.

"So many people fall into the trap of thinking there's a quick fix," says Suzanne Boas, president of

Consumer Credit Counseling Service of Greater Atlanta

. "When you get yourself into a negative situation, it takes the same amount of time to dig yourself out."

While the steps to cleansing your record are obvious, you might have a tough time breaking those bad borrowing habits.

Nowadays, you can borrow money with the greatest of ease. You can buy a home with far less than 10% down or acquire that Mercedes you've been dreaming about since junior high school -- all thanks to credit.

Indeed, consumer debt as a percentage of disposable income is at its highest level since 1988, according to first-quarter data from the

Federal Reserve.

Of course, all debt isn't bad debt. If you can pay your bills on time, you're fine. But such easy access to credit can quickly put some consumers deep in debt.

Your monthly debt payments shouldn't exceed 20% of your take-home pay. If you're leveraged to the gills and you unexpectedly lose your job, you could wind up dodging creditors in no time.

Roland Chupik, president and CEO of the

Consumer Credit Counseling Service of Greater San Antonio

, recalls one college student who graduated with $25,000 in credit-card debt. The young man was expecting to make at least $40,000 a year in his first job but wound up taking a job that paid about $24,000. He simply couldn't pay his bills. "We initially helped him reduce his monthly payments," says Chupik.

If you are struggling to pay your debts, you should do the exact same thing. If you aren't going to be able to make your regular minimum payments, you should immediately contact your creditors to work out a modified payment plan.

"You never want the creditor to make the first contact," says Chupik. If you let your credit problems fester until they reach the point that they contact you, you've lost some of your negotiating power.

You might be able to negotiate a lower minimum payment or the lender might agree to reduce or eliminate your interest payment. You may even be allowed to skip a few payments.

"You have to look at it from the standpoint of the creditors," says Norm Magnuson, vice president of public affairs at

Associated Credit Bureaus

, an industry trade group. "It doesn't make a lot of sense for creditors to throw away business -- good, bad or otherwise. If they turn the consumer away, chances are one of their main competitors will pick up that business."

You don't want to reach the point that your accounts are turned over to collection agencies, which means your creditors have essentially given up on you. To clean up your credit record, however, you do want to clear all bad debts, whether they're with a debt collector or not.

"The ultimate goal is to get everything to a zero balance," says Chupik.

If you are struggling to organize a repayment plan on your own, you may want to contact a credit counseling service. The

National Foundation for Credit Counseling is a national, nonprofit network of local credit counseling centers. (You can locate the nearest center on the organization's Web site.)

For little or no cost, one of these centers can help you create a budget and organize a payment schedule. They can even negotiate payment arrangements for you with creditors, consolidating your debts into one monthly payment.

From there, you want to make those regular monthly payments on time and avoid accumulating any more debt.

If you look at the scoring used to evaluate your creditworthiness, 70% to 75% of that number is based on how much of your total credit line you're using and how consistently you pay your bills. For a solid credit record, you shouldn't be using more than 35% of your total available credit and shouldn't have any late payments, says Magnuson.

Over time, a positive payment history will supplant a negative one.

If you don't have any credit and you're trying to establish some, you can get a secured credit card with a bank or a credit union.

You actually put money into a savings account and the lender will give you a credit card with a limit up to the amount of cash in the account.

This way you can build -- or rebuild -- a positive payment record. After a year or more of good behavior, the bank will generally release the collateral and give you a new line of credit.

Most important, don't buy into any offers that promise to quickly fix or magically repair your credit.

The

Federal Trade Commission

has recently cracked down on scams that promised to hide any negative credit information by replacing your Social Security number with alternate numbers, essentially creating a new credit identity for you.

Well, that's illegal. Any way you cut it, if you want to improve a bad credit history, you'll simply have to pay your dues and wait it out.

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