If a poor credit rating is keeping you from realizing that dream of buying a new car, or your first home, you are far from alone.
Recent research from the nonprofit Corporation for Enterprise Development, or CFED, has found that 56 percent of American consumers have subprime credit scores, which prevents them from qualifying for credit or financing at prime rates.
Emma Kane of Compton is one of them, but she’s fighting her way back. One year ago, the teaching assistant was saddled with $50,000 in debt, making just $20,000 a year.
"The debt was… medical bills and student loans," Kane recalled. "[I had to decide] am I going to have gas for the month and am I going to pay my car note, or am I going to pay this medical bill."
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Kane says her decision to skip paying some of her bills, and pay others late, wrecked her credit.
In desperation, she turned to Operation Hope, a Los Angeles-based nonprofit that provides free financial counseling. Counselor Emily Grajeda put Kane on a "fiscal diet."
"It's just a spending plan, having a goal," described Grajeda.
Kane took a second job, moved in with family, cut her spending, and in just one year has paid off $5,000 in debt.
"I do have a good amount in savings right now," she boasted. "It's over $5,000...which is more than I ever had."
Kane is hoping to keep building her savings, and eventually buy a home of her own.
"It's time to leave the nest, and get my own nest!"
If your credit score could use a boost, here are some steps to take:
- Get a copy of your credit report, you're entitled to one free report annually.
- Dispute any errors you find with each rating service. You can now do this online.
- If you've missed payments, try negotiating to erase debts that have gone to collection, by offering to pay the creditor what you owe in return for having the black mark erased from your report.
Additional resources for finding ways to manage your debt and credit can be found here.
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