Improving Your Credit Score Is Possible

As I said in my last post, knowing your credit score and credit report is important when searching for affordable housing. For your reference, here is a typical credit score breakdown:

If your credit score is: Your credit is considered: And you will pay:
720-850---------- Excellent-------------------- The lowest interest rates on loans
690-719---------- Good to Excellent----------- Low or high rates; shop around
660-689---------- Good------------------------High rates; shop around
625-659---------- Fair------------------------- Very high rates; shop around
590-624---------- Poor------------------------ The highest interest rates on loans
300-589---------- Very Poor------------------ You might not qualify for a loan

If you have a low credit score, there are a number of ways to improve it. However, it takes time and effort. So avoid any organizations that promise quick fixes!

Here are the top ten tips for improving your credit score, as stated by NYC Habitat for Humanity.

1. Pay off all of your bills on time every month - its the fastest way to add points to your credit score
2. Pay more than the minimum per month - otherwise it will take you longer to pay off your balance and you can pay up to 3 times your balance in interest
3. Pay down your balance - the wider the gap between your balnce and total credit limit, the better your score - aim to use no more than 30% of your available credit
4. Read your monthly statement/Review terms of your card - verify the interest rate and credit limit every month and look for mistakes - if you find mistakes, report it to the credit card company
5. Review all three credit reports at least once per year - remember that http://www.annualcreditreport.com/ is the only way to get a free credit report
6. Build an emergency fund - if an unexpected expense comes up, you can then pay in cash instead of charging it
7. Take extreme caution when transferring credit balances to low-interest rate credit cards - it's better to stick with paying down your balances
8. Stay on top of "hard inquiries" - "hard inquiries" happen when you apply for new credit and a lender reviews your credit history - this can lower your score - so shop for one loan at a time and don't spend more than 30 days shopping for the best rate
9. Wait six months after you have applied for credit to apply again
10. Be careful about closing your credit card accounts - when you close your accounts, you lower your total available credit - the longer you have an open acount the better

Stay tuned for my next post for places to receive credit counseling!