What is credit?
In broad terms, your credit history and score tells a potential lender how reliable you are when it comes to paying your bills. In terms of rent, your credit – or lack thereof – indicates whether your landlord can trust you to pay your rent every month and full time. Landlords, banks, and other creditors are taking financial risks when approving leases, loans, or a new line of credit, and they want to know that this risk is relatively low before working with you.
Why Credit Matters for Renters
The hard truth is that if you have a poor or no credit, you may not get the apartment you want, because your future landlord may not be willing to risk losing money if you own one. Can not pay rent. However, there are no strict rules regarding the minimum credit score or type of credit history rental. Your landlord’s decision can be influenced by several factors: the city you live in, housing relative to your income, monthly rental competition, and their experience with previous tenants.
When you apply for an apartment, be prepared to gather a lot of information about you to your future landlord. In addition to your credit score and history, they may consider your current income, your past rental experience and references from other landlords. They can ask you for a background check and see it on social media.
Whether you already have great credit and want to keep it that way, or you are just starting to build your history, there are some things you need to do to position yourself as a competitor for financial success is.
Request your credit report and be proactive with the results
You can request a free copy of your credit report, once a year, only through the three major credit bureaus – Experian, Equifax, and TransUnion, the official government-sponsored website ccreditreport.com. You have to pay for more frequent reports. Many credit card companies and financial services provide free credit score reporting to customers, although you can also purchase your scores and reports directly from VantageScore and FICO.
Although both models use the same criteria to determine your score, they collect and weigh their data differently, and lenders may use one or both when using credit.
Once you receive your reports, review them to ensure that your personal and account information is correct. Credit reporting is not correct, and it is best to act quickly on any mistakes or outstanding debts, especially if they have been sent to collection agencies. Eliminate errors and request that a correct report be sent to recently received lenders.
Sign up for credit monitoring
The best way to stay on top of any irregularities or unexpected dings – bills that were sent to an old address and which have become fragile, for example – is to use a credit-monitoring service. The number of services provides more frequent monitoring of your credit report from all three credit bureaus and alerts you to any problems. Some also include identity theft protection, an important feature to consider recently given data breaches.
Build debt slowly and responsibly
If your credit history is bad, take it one step at a time. Frances Williams, a senior credit advisor at 123 Credit Consultants, recommends starting with a secured credit card, which has a lower credit limit. Open an account with at least a $ 200 deposit – for many cards, your deposit is equal to your limit – charge only a small percentage of your total available credit, and pay the bill on time.
However, signing up for a set of cards and accounts is not a simple building credit. You should use various forms and use them responsibly. Andrew Rombach of Landadoo said that car and timely student loan payments also point to a positive loan history.
Report your rent payment to the credit agency
If you report them then your rent payment can further boost your credit. If you are paying rent using COZY, you can report to Experiment Rentburo to select these payments. This means that you can improve or build your credit history by paying your rent.
When you rent, you will have to set a credit for the house in the future, when you need good credit to get a mortgage.
Pay on time and in full
Tim Manny, a home expert, says, “It can take years to remove black marks, collection accounts, and late payments to recover your credit score and it can take months, or even years.” NerdWallet.
Furthermore, if you make only the minimum required payment each month, you will end up with a significant amount in interest. Pay your statement balance – and up to your entire account balance – before the due date.
In addition to periodic payments, how many types of credit accounts you have and the average age of those accounts also affect your score. Late payments can quickly sink your score, and the later you are, and the more payments you miss, the worse it gets.
Be on top of due dates
Timely usability, cell phone and cable bill payments are usually reported to credit agencies and directly affect your score, falling behind can damage your credit. If you get overwhelmed with managing your bills, set up automatic payments. You can also call your credit card companies and adjust the due dates to be paid or to write your rent check.
If you still have credit then you have options.
If you have a low credit score, have a limited credit history, or are already refused on an apartment application, a sign of disappointment. If a parent or relative signs your lease with a strong debt and takes financial responsibility for your commitment, it will often meet the needs of a landlord.
If you have remaining savings, but are still working on increasing your credit, then pay an extra month or two of rent as a good gesture. Provide references from previous landlords if you were a respected tenant who paid rent on time, or offered proof of income and other financial assets. Finally, some homeowners may not check for credit, so ask about the application process before proceeding.
How can I build credit?
I am going to assume you mean, “How can I build a good credit score?”
If you do just want to build credit, simply buy everything you want and you will have a lot of credit. Translated, that means you will have a lot of debt.
Building a good credit score takes time. Start relatively small. Buy something you know you can afford to make the payments on. Do not agree to making the smallest payment allowed, thinking you will make bigger payments therefore you will look good and get a better score.
It doesn’t work that way. The credit company is computing that they will receive all that interest income you have agreed to pay them. When you pay it off early they lose all the expected income and as a result they may assign you a lower score.
Agree to a payment you can afford and never miss or be late. Always pay at least the minimum payment or all those promotional interest rate promises will disappear, and you will be paying somewhere between 25% to 30% for the rest of the term.
Just be patient and manage your finances responsibly, and you will see a great score which you will have earned.
Best Way to build up Credit Score
- Always use a credit card and always pay it off every month. NEVER transfer balances.
- Try to use two credit cards at most, never more, and don’t fall for deals that get you signing up for others to get discounts.
- Never state your real income on applications. State enough to get the card or service, but not enough, that if you lose your job, it will make a difference. Come up with an average. Credit scoring agencies downgrade you for changing jobs and getting less income.
- If you lose your job, try to get your employer not to report the move until you find something else. Credit scoring agencies downgrade you for losing your job.
- (Of course) pay all your bills, but pay them at least a day early and use auto-debit.
- If you’ve seen drop in your credit score, find the source. If it’s because of non-payment, reduce the number of obligations (for example, try to get bills bundled into one).
- Get car insurance, but never “use it”, meaning, if you have an accident, pay out of pocket.
- Never, ever co-sign.
- Don’t check your credit more than once or twice a year–before and after you try this advice.
- Don’t apply for anything (ANYTHING) until you are almost certain you will go with that lender, creditor, supplier, etc. as they will do a credit check and it will potentially damage your score.
Note: Credit scoring agencies are notoriously, poorly manned. They use models that are out of date, over fitted and inaccurate, but they don’t care: they are monopolies. As a result, you have to try to be average to above average in everything you do that leaves a trace!
Checking Credit Score
This is a string of 3-digit numbers run together:
- 580 640 700 750 300 850 and then 5442
The first 6 numbers correspond to the “scale” that’s displayed in the form of a semi-circle (out of sequence, apparently, because the “300” and “850” are below the semi-circle):
- 300 580 640 700 750 850
Your score will be inside the semicircle, possibly followed by the change either up or down, from the last time you got a new score on Credit Karma.
- So it appears that this is saying that your score is 544 and it has changed 2 from last time.
There are in fact two semi-circles next to each other, for Trans-Union and Equifax. So I’m guessing you see the sequence of numbers twice, with the 3 digits after “850” being the score for each of Trans-Union and Equifax, and additional digits indicating the change.
The “needs work” is a description of your score range. Using the “credit factors” feature can help you identify how different aspects of your credit report affect your score.