Credit score effects

April 29, 2008 9:00:00 PM PDT
Of all the numbers we have to remember these days, what with passwords for just about everything, we don't pay much attention to our credit score. That, experts say, is a big mistake.

Do you want to borrow money, or a buy a home, or a car? It could depend on your credit score.

Eyewitness News reporter Tim Fleischer takes a look at your credit score and how to keep it up.

Facing the reality of these financially difficult times, Narissa Kendall still hopes to realize her dream of owning a home somewhere in Queens or Brooklyn.

"I have to try to keep it as up as much as possible," she said. "So that means I have to try to pay the bills on time, pay more than I should."

After retrieving her credit report though, she's finding the requirements are much more difficult.

"With the market and the industry the way it is now, a [score of] 600 is not even considered good," program coordinator Angella Davidson said. "It is mediocre. For a client...buying a home, we're looking for 730, 750 and above for her to get a good interest rate."

Your credit report drives your ability to borrow. Your credit score, most measuring between 300 and 850, reflects how likely you are to repay a loan.

"If all your cards are maxed out, that just looks like you're living on the edge," Marion Asnes said.

Asnes is the editor at Financial Planning Magazine. She suggests after getting your credit report, you improve your score. It can start with keeping your debt at a manageable level.

"Your debt should never be more than 25 percent of your annual income," she said. "It just shouldn't."

Also, pay your bills on time.

"If you cannot pay it at one time, pay it off in three installments," Davidson said. "At least you're developing a history, and they see that."

Also, don't take on new credit card offers and don't close out all old accounts at once.

"Get some of that unused credit out of your credit report," Asnes said. "But don't do it all at once, so it looks like, oh my God, she's running away from town, you know?"

And above all, the experts say, don't panic. There's plenty of help out there, like Neighborhood Housing Services. Kendall used the East Flatbush office.

The neighborhood Economic Development Advocacy Project also operates a hotline to help.

"There are so many scams out there in this area," staff attorney Claudia Wilner said. "So it's one area where we encourage people to be really careful and to go to a trusted community resource for credit counseling."

But Narissa is now determined to improve her score and realize her dream.

On the Web:

Free Credit Report

Neighborhood Housing Services

Neighborhood Economic Development Advocacy Project

Financial Planning Magazine