Have you missed any car payments? Been late paying for a phone bill? Are you only paying the minimum amount on your credit cards? All of these factors can contribute to a low credit score.
If you want to purchase a condo or a home, you'll need a good credit rating and a positive spending and bill-paying history.
*Know Your Numbers
Your ability to buy real estate hinges on your credit score. While credit scores range from 300 to 850, you need a score over 740 to get good lending rates.
"The higher the score, the less risk you will pose in defaulting on the loan," says Katie Ross, education and development manager of the American Consumer Credit Counseling, a national financial education nonprofit.
You still may qualify for a loan even if you have a low credit rating, "but you'll need to shop around with multiple lenders" to find a loan, says Erin Lantz, vice president of mortgages at Zillow, a home and real estate marketplace.
Lantz says consumers with a credit score "below 700 but above 600" may have to pay a high interest rate on the loan, additional fees or pay a higher private mortgage insurance rate.
Finding out your credit score is easy and free. The three major credit-reporting agencies, Equifax, Experian and TransUnion, have to give consumers a free credit report each year. Get yours online http://www.annualcreditreport.com or call 877-322-8228.
Once you get your credit report, review it to make sure it's accurate. If it's not, contact the credit agency to report the problem.
"Under terms of the Fair Credit Reporting Act, the credit bureaus must investigate any disputed items and remove them from the credit report if they cannot be verified," says Kevin Gallegos, vice president of Phoenix operations for Freedom Financial Network, a company that helps consumers improve their finances. "If you disagree with the results of a credit bureau's investigation, you can ask the bureau to include a statement of dispute in your file and your future reports."
Ross suggests checking your credit report every four months. "Be sure to mark which agency you last pulled from," she says.
*Improving Your Score
It's important to pay all accounts, such as loans, rent, phone bills and utility bills, on time. This is the number one action to boost your credit score, says Lantz, who explains even one 30-day late payment can damage your credit.
"Once you have legitimately taken a hit to your credit, in can take months, if not years to get back into shape," says Lantz, who continues, "Once you have your finances under control for an extended period of time, your credit score will start to get better."
*Follow These Tips to Fix Your Credit:
--Get rid of debt. "Pay down debt as much, and as fast, as you can," says Gallegos.
--Have multiple types of credit. It's a good thing to have a variety of credit types, like auto loans, credit cards and student loans, provided all the accounts are in good standing.
--Avoid opening new credit cards. Doing so could result in a lower credit score when you're trying to buy property.
--Don't close old credit cards. Keeping older cards can "help boost your credit score," says Ross.
--Use one credit card. Continue to use a credit card, but limit yourself to just one. "It is not necessary to use more than one," says Gallegos.
--Know your credit limits and watch your spending. Ross advises not spending more than 30 percent of your credit limit.
--Avoid credit repair services. While credit repair companies may provide a quick fix by questioning transactions on your credit report, "there is nothing that a credit repair service can do that consumers can't do themselves," says Gallegos, who also mentions credit repair services "can be expensive and do not solve any root problems."