PERSONAL FINANCE: HOW DO YOU CLIMB OUT OF SUBPRIME? 2

First, find out your credit score and credit risk rating by obtaining a credit rating report from TransUnion (www.transunion.com), Experian (www.experian.com), or Equifax (www.equifax.com). Ascertain whether all the entries are correct and fair.

The most common causes of a low credit score (600 and below) or a high credit risk rating (R5 or higher) are:

a short credit history: 2 or 3 late payments do not look as bad in a 5-year record as in a 2-year record

total loan payments are more than 40% of your personal disposable income

a record of bankruptcy (records are kept for 10 years)

frequent late payments: an indication of inadequate cash inflows

frequent availment of loans: another indication of inadequate cash inflows.

In the next posts: what can / should you do to avoid or erase these black marks on your credit rating and climb out of subprime.

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