Suppose you've been refused a loan, or offered one, but at an incredibly high interest rate. You are unable to receive a credit card - all of the providers turn you down. This is all because of your bad credit.

What is 'bad' credit and how can you fix it?

Poor credit worthiness is usually defined as having a FICO score of 650 or below, with a score of 500 or lower making you virtually radioactive in the view of credit card companies. FICO is a number reflecting your credit worthiness which is calculated by the three big credit reporting agencies and is based on data they compile including outstanding debt, number and length of late payments, among other considerations.

The first thing you need to do to change this is generally entirely a personal matter. Perhaps you have a hard time imposing a budget on yourself, or you tend to overspend. For these problems, you might need a credit repair specialist or a financial counselor. However, there are some practical things which you can do to help which are entirely within your power.

You first will need a copy of your credit report from all three of the big credit reporting agencies:Equifax, Trans Union and Experian. You can request a copy once yearly from each agency. Look very carefully over these reports, along with an expert if you need some help interpreting them.

While there are no official records kept on this, it is estimated that between 10-40% of credit reports contain errors. These can include the wrong address or age for the person whose report it is - these are relatively minor. Some are far more serious, such as showing open accounts which have long been resolved, even debts which you never incurred in the first place! This is why you must look over these reports carefully. Make sure that everything is up to date and correct.

Next, set a realistic monthly budget for yourself. Include all normal expenses and set aside an amount for unforeseen expenses. Next, call your creditors - if you run into someone rude or unwilling to work with you, be polite but don't be afraid to ask to speak with their supervisor. Tell your creditors what you can realistically pay and ask them to consider reducing the amount of the debt. They may not do this right away, but will often reconsider your request once you have made regular payments for a time. If you make a payment agreement with a creditor, be sure to stick to it.

Destroy and return any of your credit card that you genuinely do not need. Keep paying off the outstanding debts on these cards until they are either completely paid, or until such a time as you can talk the creditor into forgiving your debt.

Pay what you can, as soon as you can. Start with mortgage loans and move on to small balance debts with a high APR - be sure to completely pay these debts. Next, move on to your debts with larger balances. If possible, pay something every month on each debt.

When you do apply for a new card, you'll have some choices. You can, for instance get a secured card no matter what your credit score is. The credit limit on this card is limited by the amount of money that you put into the account - use this card for emergencies only.

There are other cards which you may be able to get as you are working on building up your credit worthiness. A gas station card or department store card, used wisely can be a way to build up your credit score.

Fixing credit worthiness is a process which will take some time and patience. Come up with a plan to repair your credit worthiness and stick with it - you'll get there sooner than you think.