By now you've (hopefully) pulled your credit report. If your FICO score was below 650 or so, likely you've got some bad marks: collections, charge-offs, late payments, and so forth.

Usually people go through several emotions when seeing these negative marks, depending on their personalities and the specific credit situation. My first reaction was, "WTF?? My credit's been wrecked over less than a thousand bucks worth of collections and charge-offs. Come on people, it's not THAT [bleep]ing serious. I was just having cash flow problems at the time. The high-rollers write off hundreds, even thousands as much times of debt and no one hounds THEM, dammit! GRRRRRR!!"

Or, you might be feeling shock, perhaps even kicking yourself in the rear for forgetting to pay that last cable bill at your old address four years back. Maybe you're thinking, gee, if I just pay all this off, it'll get better. (It won't!)

My advice is to set emotion aside. Your feelings are probably natural, and they may in fact be legitimate, but remember you're dealing with a machine here. Machines don't respond to anger...well, unless you kick them until they stop working, but that's not an option here and not what you want anyway. You want the "machine" of credit scoring to work for rather than against you. So print out a copy of your credit report and pin it to the target at the local shooting range if it makes you feel better (it did for me!), but after you've let out your emotions, resolve to settle down and attack the problem like Mr. Spock or Commander Data rather than John Rambo or Dirty Harry.

Start by looking on the bright side: unlike most American consumers, you now understand your low credit score is directly and solely related to your credit report. So let's look at that credit report. List ALL the bad stuff on it, in reverse chronological order (most recent to oldest). Now, read through the items. Are any of them unfamiliar to you? Companies you've never done business with? If that's the case, then those items may not be yours. So, before you plan your attack against your baddies (as credit veterans refer to negative entries), some careful triage is in order. Attacking baddies in the wrong order can be worse than not attacking them at all.

Those aformentioned items may not be yours, but they may also belong to collection agencies that bought debt that is yours. Say you have an item for $256 from Acme Debt Resolution, Inc. Take a look at the date the item showed up. Now, go down the list and see if, at an earlier time, there was a debt for a similar amount from a company you DO recognize. Maybe you'll see a much older entry like this:

Twin River Light and Gas

Original Amount: $247

Current Balance: $0

TRANSFERRED (right around the same time it appeared under the collection agency)

And there you have it. It's an old utility bill you forgot about (assuming you once lived in or near Twin River, of course). You forgot to pay it, and after trying to collect, the company sold the debt to Acme Debt Resolution (likely for only $40 or so). Now Acme is who you have to deal with.

If, on the other hand, there is no clear antecedent for the debt and you can't recognize it, maybe it isn't yours. The law says that debts have to be reported accurately, and that no one else's debt can be reported as yours (unless you co-signed). Put a checkmark next to such dubious entries.

Next, you should be aware of the statute of limitations in your state. When you incur a debt and go into default on it, a creditor has a fixed amount of time to file suit to collect. After that time, the creditor cannot legally collect. Use the link above to find out what the SOL is in your state, and then draw a line on your list of negative entries representing the SOL, so that everything inside of SOL is above the line, and everything outside (expired) is below it.

Any collection or charge-off above the line you just drew is still actionable (in other words, the creditor could file a lawsuit to collect on the debt). Don't be unduly alarmed: most debt collectors don't find suing to collect a debt to be worth their time, but it COULD happen, so you want to be mindful that contacting the bill collector could provoke a lawsuit.

Go through the list again. Look for entries from companies that you still do business with. For instance, say you have a 60-day late when you fell behind on your Visa Rewards payments, but you caught it back up and you've been on-time since. Put a "G" next to those.

Now, go down the list one last time. You're looking for judgments and tax liens. If you see any of those, put a star next to them.

We're done triaging the baddies. For the sake of easy reference, we'll call all these items "Reds." Let's take a look at how they're affecting your score. All Reds affect your score in the same overall way...some just hit harder and take longer to decay than others. But remember the First Law of Reds:

"Reds hit your score hard and fast,

but decay over time to practically nothing."

The bottom line: as a Red hits your credit report, it's done all the damage its ever going to do. From that point forward, the baddie's effects diminish, gradually but surely.

Now for another quirk of FICO scoring, captured in what I call the Second Law of Reds:

"Always gun for the leader of the pack."

Your most recent Red is the one that's hurting your score the most--by far. This is why I had you make the list in reverse chronological order, because whatever's at the top is probably what's hurting you the most. FICO scoring downplays Reds after your most recent. They count against you, yes, but if you have four baddies from two to five years old, you might get a 40-point boost for getting rid of the first one, a 3-5 point boost for getting rid of the second one, and only 2-3 points for getting rid of the last two.

So examine that most recent baddie. If it's a charge-off or collection, ask yourself if you could afford to pay it in full, now. If the answer is yes, you're ready to tackle it. But don't whip out the checkbook yet. Remember that paying a charge-off or collection does nothing--that's right, zero, zilch, nada--to improve your credit.

Now if the account is one you put a checkmark next to, that means you have significant reason to doubt that it is actually yours. What you should do with these is a debt validation request, also known as a "DV," which is asking the debt collector to prove the debt is in fact yours. For a sample letter to write to a debt collector, click here.

If the debt is not successfully validated, the collection agency must remove it.

If it does turn out that the debt is yours, what you want is for the company that placed the item on your credit report to delete it entirely. This is known as a PFD, or pay-for-delete.

Know that this is something collection agencies are too lazy to want to do. This defies common sense--why wouldn't a collector take fifteen minutes to delete an account THEY placed from your credit report in exchange for receiving, say $500 on a debt they paid $75 to $200 or so to purchase? I don't know...all I do know is the reports I've read all over the Internet that collection agencies will give every BS excuse in the book--even lying and claiming removing a debt is illegal--to try and weasel out of taking that little bit of time and effort to make a deal that benefits both sides. All I can say is that they must be lazy, as I and everyone else I know wouldn't mind being paid hundreds of dollars to do fifteen to twenty minutes' worth of work.

So if the person you speak with starts to give you any nonsense as to why they "can't" delete an item in exchange for full payment, don't waste your time arguing. Ask for the name and address of the person in charge. You want to communicate in writing when dealing with collection agencies, anyway. If they do agree, then tell them you want a letter stating that they will remove (not "update" or "mark as paid" or "tell the credit agencies the debt is paid") the debt entirely from your credit report. Be sure to check the verbiage of any such letter you receive carefully, because I have seen numerous instances where a bill collector verbally promises an arrangement removing a debt, but then sends a form letter stating merely that the debt will be "considered paid" or "indicated as paid," which does NOTHING for your FICO score. The bill collector is obviously hoping you don't read the letter, so she doesn't have to take time out of doing her nails (or he from checking the sports scores on the company Internet connection) to actually tell the credit agencies to remove the debt.

If your most recent baddie is one you wrote a "G" next to, that means it is a late or other delinquency from a company you still do business with and are in good standing with. You don't have to worry about statute of limitations, as you don't currently owe them any money. What you will go for in this case is a "goodwill," or asking them to remove the blot from your credit history in view of your longstanding customer relationship with the company. Most companies will oblige, although you have to be persistent and often escalate through a couple levels of customer support.

Entries you put a star next to are a little different. Those are judgments or tax liens, indicating you owe a tax agency money, or that someone sued you and won. These are more tricky, because in many cases statute of limitations will not protect you (it almost never does against judgments). The bad news is that bank accounts can be seized and wages garnished to enforce these. The good news is that, if you do pay them, many agencies will (perhaps with some prodding) remove them from your credit report.

Lastly, there are reposessions, foreclosures, and bankruptcies. These are more difficult, and often impossible, to remove or goodwill away. Only time will heal these Reds. But heal them it will...as we reveal in the next page.

After you've removed your most recent Red, time to move on to the next, and so on. If you encounter one that you just can't get rid of ("the turd that just won't flush," as one correspondent termed an old, paid collection), then move on to the next one...but understand that removing it will have a much smaller effect on your score.

There's a whole art and science to attacking negative entries on your credit report; I have merely given a strategic overview here. For a more in-depth discussion of tactics (i.e., the nuts and bolts of removing negative entries), I recommend the Fair Isaac Credit Forums, starting here.