Is Your Credit Up to Par

Is Your Credit Up to Par?

Let's face it ladies- poor credit is something that affects alot of different aspects of everyday life. It affects your first home or car purchase, the ability to secure a credit card for big purchases and emergencies, and the likelihood that banks will offer you a loan. Even if you are given a loan or credit card, you will be charged higher interest rates than those individuals with a more positive credit score. For whatever reasons- young, black women are more likely to suffer from the ill effects of poor credit than white women. The truth of the matter is that a bad credit score results in less money in your pocket- which is not one of the goals of a YBR Woman! If you're thinking to yourself that it already may be too late for you- THINK AGAIN! One of the most positive aspects of the FICO Credit Score Rating System is that it is very forgiving and very EASY to change (in either direction). Check out some tips below that will provide a boost in your score much sooner than you think.

Step 1: Know Your Score
There are alot of "free" credit report websites out there that promise you a look at your report free of charge. The truth of the matter is that most of them are not actually free. You have to sign up for some monthly program or apply for a high interest credit card (which is so counterproductive). Even if they do offer you a free report, your score is never included so you still don't know exactly where you stand. I suggest www.myfico.com This is the most accurate and most user friendly site I have come across. While there is a small fee to obtain your report and score ($15-$50 depending on which program you choose)- the benefits truly outweigh the cost.

Step 2: Get Organized
Make an accurate list of all of your outstanding bills. Do you owe money on a car loan, student loans, credit cards? Get everything in order and come up with a final list of how much you owe each creditor. The analysis you will obtain from www.myfico.com is very helpful with this process. They literally organize all of your debt in an easy to understand format.

Step 3: Decide Your Plan of Action
Is your poor credit score due to outstanding/late bill payments, high credit card balances, excessive credit inquiries, bankruptcy or civil judgments? Attack the most severe aspects of your credit head on. Write a letter to each credit bureau as well as each one of your creditors disputing any information you deem inaccurate, out of date, or missing information. *Remember the Creditors and Credit Bureaus have the burden of proof. If they cannot provide proof of accuracy within 30 days of the time you contact them, they are bound by law to remove these items from your report.

Step 4: Decrease Your Debt to Income Ratio
The easiest way to do this is to pay down your debt. A ratio of 10-30% is ideal. However, if you do not have a large amount of cash on hand you can do one or more of the following:
1: Call your credit card company and have them increase your credit limit
2: Create another source of income and use it to pay down your debt
3: Put yourself on a budget and use your savings to pay down debt

Step 5: Know the Tricks
Many people will tell you that DEBT is bad. The truth of the matter is that there are different types of DEBT- GOOD DEBT and BAD DEBT. If your DEBT is created buying Louis bags and Gucci shoes- that's BAD. If it's created buying investments and real estate- that's GOOD. Also, closing credit cards will actually do more damage than good to your score. It's better to have a card and not use it than to close that card. Also, the popular notion that people with higher scores pay off their credit card debt in full every month is wrong. The trick is to pay off 70-90% of your debt and have the balance carry over as revolving debt. After every three months pay off your debt in full and start over.

Alecia D. is not a professional credit repair specialist. The above content is for informational purposes only.