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Sign in to Xbox LIVE with the profile whose Gamertag you want to change.
Go to My Xbox and open your profile.
Select Edit Profile, Gamertag.
Read the scrolling information about changing your Gamertag. When you're done, select Continue.
Enter a new Gamertag and select Done.
If the Gamertag you want is already in use, you'll be offered several others to choose from. Press Back (B) to try another Gamertag; repeat as needed until your chosen Gamertag clears the availability check.
From the Edit Gamertag screen, review your Microsoft Points balance and choose from these options:
Select Confirm to complete your Gamertag change and deduct 800 Microsoft Points from your balance.
Select Redeem Prepaid Card to add Points to your membership using a prepaid card.
Select Cancel to change the new Gamertag you're requesting or press Back (B) to return to the dashboard.
I may well be forced to pay for a name change, as you do get morons on xbox live anyway, but when they target you for a simple thing as your name, online becomes even more unbearable. I don't believe in MS Points, as they're just a little scam by microsoft to make you fork out more money for extra content which is a 'must have' and 'adds amazing elements to the game'. I hate 'extras' that you can get, they're just annoying and soooo commercial. I'm barely on live anyway. Nope, i refuse to pay for a name change. I'm just going to keep pestering microsoft until they do it for free as i think my reasons are pretty fair, and if anybody's responsible for the racism (apart from the racist) it's microsoft.
Just an extra note, when i first contacted them, they expected me to block anyone who was racist to me! So i replied saying that i did not fork out a ridiculous £40 to be called names and spend my time blocking people! The PS3 is looking better by the minute (considering it's FREE!)