First and foremost, you will need a copy of your credit report and credit score from each of the three major credit bureaus. Each credit report can possibly contain different information since creditors don't all report to the same credit bureau, and some use more than one.

It’s very important to stay organized. Keep notes, copies of letters, bills, or whatever else you have associated with your debt. Keep a folder for each creditor that you will be working with to fix your credit report. Keeping things organized and within easy reach while you work will help a great deal when working on improving your credit.

Go through each credit report and make a note of any errors, as well as good credit references left out of your reports. Next, write a letter to each credit bureau outlining the errors and omissions. In addition, write a letter to each creditor who has not reported the good credit references you do have.

After 30 days, get a copy of your updated credit reports. If bureaus and creditors have not taken the appropriate actions that you have requested, write more letters. Repeat this until all items are cleared and posted. If 90 days have passed, and something is still not fixed, file a complaint with the FTC (Federal Trade Commission) under the Fair Credit Reporting Act

If you don't have errors or omissions to fix, and just have bad credit, negotiate good updates with your creditors by either settling debts, or making payments on time until the debt is paid. Open a savings account, make regular deposits and leave the money alone. Apply for a low limit, or secured credit card. Use it and pay it off on time each month. Make all credit and loan payments on time or early.

When your credit improves, it is a win-win situation for you and the creditor. Take advantage of lower rates whenever you can. Things don't happen overnight, but after 6 or 8 months, you should see an improvement in your credit score.