It seems like a no-brainer but fixing your credit is pretty important. Whether or not you plan to apply for a credit card, finance a vehicle or take out a personal loan for a large purchase, you will likely experience one of many life events where your credit history can help you avert or careen headfirst into disaster.

You can plan when and how to purchase a vehicle, whether or not to buy that $500 purse and what additional costs to take on (should you get cable tv?) but there are some things that can’t be planned for. Injuries, job loss, or other unforeseen costs equate to financial emergencies. When your car starts making that strange clunking noise again…is it worth taking to the shop? Fido ate some human food and now he’s sick with a really expensive vet bill to boot…okay you get it by now.

These are situations which are unplanned and in some cases, unavoidable but they still cost us and our wallets significant grief. They’re also situations in which financing may be available or where you can apply for a loan through the bank. Unfortunately for many Americans, applying for credit simply isn’t an option. According to some sources, up to 30 percent of Americans have poor or bad credit and lots of people have no credit at all.

Check Your Score

Bad credit doesn’t have to be your destiny or your future! The good news is that you can repair your credit, the not so great news is that it will take a while. The first important thing is that you know what your credit score is and what your credit report looks like.

Checking your credit report is the only way to know which steps to take next. For instance, credit inquiries, made by lenders when you request credit from them negatively impact your credit score. That means that opening too many accounts or even just applying for too many credit cards, loans or other credit lines can hurt you. This is important to understand because many people try to build their credit by opening store credit lines (which are usually easily approved), but this can lower their credit score for some time.

It’s also important to know if any accounts of yours are being reported as delinquent or charged-off. It can be scary to take a look at what’s going on with your credit score but it’s definitely worth it. Some financial institutions offer free credit score information (it doesn’t hurt your credit to view your automatically updated credit score) each month if you have a credit card with them already. Otherwise, you can request one free credit report each year, showing scores from the three major credit reporting agencies, Equifax, Experian, and TransUnion.

Removing Credit Report Items

Let’s assume you took a look at your credit report and it’s pretty bad, or at least there are a few things you’d like to clear up. The first step is to contact any companies that you may owe money. While you won’t see the results immediately and it may take a while to pay them off, it’s better to show that you can and do pay your past debts. Depending on the age and the amount of the debt, you may even be able to settle the debt for less than you actually owe. Companies are willing to do this to receive at least some of the money that you owe them. Once paid off they will be removed as negative accounts on your credit over time and your credit score will improve.

Although it seems pretty obvious, paying your bills on time is important for your credit score. For most companies, if you’re struggling with paying a bill you can make a payment plan to prevent the account from going into default. If you’re having a hard time with utilities, see if your utility company offers a payment plan or price reduction. For those who are deemed to have an income insufficient to pay the entire amount due, with proof of income, you may be able to receive assistance paying.

Building Credit for the Future

If you’re ready to get off the defensive and apply for credit again, the important thing is to do it the smart way. If you have no credit or poor credit, consider applying for a secured credit card. With a secured card you put a deposit down on the card, which then becomes your credit limit for the card. In this way, you can’t go over the credit limit but your payments are still reported to credit agencies like a regular credit card.

If you really need a loan, say for your education or for a medical emergency, it may help to get a co-signer. However, due to the detrimental effect finances may have on relationships, it’s important to explore all other options (like payment plans or scholarships) before heading for that loan.

Once you have a loan or credit card, try to avoid just paying just the minimum each month but if you can only pay the minimum then make the minimum payment instead of no payment. If you’re forgetful or have a lot going on, it may be a good idea to set up automatic payments for your bills and/or set up payment reminders. Some lenders even have reminders that go to your phone or email so you’re more likely to see them.

The Waiting Game

Remember that credit repair takes time. Credit inquiries can remain on your credit report for up to two years and once you pay off an account or pay on a credit card, you score will not be updated immediately. The important thing is to be patient, diligent and honest with yourself about the financial burdens you’re ready to handle. Bad credit isn’t forever.