That bad credit decision you made in college can haunt you for the rest of your life. However, if you’re smart about it, you can restore your good credit and make things like applying for a loan to purchase a home an easier task.

Writer Kate Raidt of www.SWparents.com knows all about restoring her good credit. Raidt filed for bankruptcy in 2001, and 10 years later has not only officially removed it from her credit score, but she now has a credit score of an impressive 820! Read on as Raidt lets us in on how she went from one of the worst credit histories a human being can possibly have to one of the top 1 percent of credit scores in America.

First, here are the facts about credit scores:
• A credit score is primarily based on credit report information, typically from one of the three major credit bureaus: Experian, TransUnion, and Equifax. Income is not considered by the major credit bureaus when calculating a credit score.
• The most common score comes from FICO and can range from a score of 300-850
• In 2010, the average FICO credit score in America was 723
• Less than 1 percent of Americans have a credit score over 800
• In 2009, the Administrative Office of the U.S. Courts determined that there were 1,412,838 non-business bankruptcy filings in America that year

Here are the steps Raidt took to re-build her credit and earn a credit score over 800, as written on SWparents.com

1. I had a big “Come to Jesus” wake-up talk with myself. The day I walked into bankruptcy court I swore to myself this will never happen again. Ever. Ever. I had to admit to myself that I was living way beyond my means and my credit card debt was nobody’s fault but my own.

2. I had to completely change my spending habits. Cash only. I had to live by the old rule If you can’t pay cash for it, you can’t afford it! Boy, ain’t that the truth? Every time I walked in a store, I had to ask myself “Do I really need that? Why do I want to buy that? To fill an emotional void? Keep up with the Joneses? Walk away, Kate. Walk away. YOU DON’T NEED THAT.” Today, if it’s not me having this conversation with myself, it’s my husband.

3. I had heard horror stories about people who had filed for bankruptcy who couldn’t get a car or even an apartment to live in. About a year after I filed for bankruptcy, my car was stolen and I had to purchase a new one. The credit manager said my interest rates would be a little higher, but other than this I had no problems buying a car. Years later, I became a homeowner – no problem at all. The lender didn’t even mention my bankruptcy! Why? This takes me to my next step…

4. I was a ninja at repairing my credit. I paid ALL bills on time. I got copies of all three credit reports and found mistakes on all of them that were costing me points. I wrote letters to all three credit bureaus and asked for these mistakes to be removed. Unfortunately, in this country, you have to have debt to have positive credit history. I applied for ONE credit card with a very low limit of only $1,000 and I started playing the credit game: Put very small purchases on a credit card (gas, groceries) and pay it in full every month. If you do this over and over (and never get close to your credit limit), then you will be declared a person who can manage a credit card responsibly and your credit score will fly in a positive direction. If you start to play the credit card game and you see yourself falling into old habits, destroy your credit card immediately and stop the game. The majority of people I know who have filed for bankruptcy end up in even bigger debt 7-10 years later. Why? Because they never learned how to control their spending habits.

5. My final biggest step? I married a man who is a ninja about finances (thank you, Daniel!). He is tougher on me than I am on myself. He never spends what we can’t afford and is a big believer of living below our means (he doesn’t care about the Joneses). Another trap for people trying to get out of debt is that they have a spouse who is a big spender. What if dad was in recovery for alcohol abuse, but mom kept the fridge stocked with Budweiser? How successful do you think dad’s recovery will be? Same rule applies to money. If you are trying to hunker down and get your finances in order, but others around you are sinking your ship, then BOTH of you need a Come to Jesus talk, a Dave Ramsey course or a slap in the rear by Suze Orman.

To read the original article, click here.