As a renter filling out apartment applications, you’re searching for a home that will meet your budget, lifestyle and work needs. But there’s another thing you may have overlooked that might keep you from moving into your dream home: your credit score. Some property managers value this above all else, and if yours is nonexistent or poor, you might encounter barriers preventing you from securing your dream apartment. Yet if you don’t have a credit score (if a credit card has never been issued in your name) or yours isn’t in the best shape, don’t despair. Here’s what you need to know about building your credit history, repairing it and renting without a great score. Wendell De Guzman, CEO of Chicago-based real estate investment company PCI LLC, shared what you need to know about your credit score as a renter. PCI specializes in rent-to-own apartments and is constantly evaluating potential renters’ credit scores.
How to Build Credit If You Have No History
If you’ve never had a credit card in your own name before, you need to build or repair your credit score. De Guzman recommends you open up a secured credit card — one with which you put down a cash deposit, and that’s the amount you can spend. If you don’t have any credit history, are reestablishing your credit history or need to repair poor credit, you might only be able to get a secured credit card. Not all banks issue these types of credit cards, and most have an annual fee. Be sure to shop around before you commit to one. After six months, you can get an unsecured credit card.
How to Maintain Good Credit
The #1 way to maintain good credit? Pay your bills on time. De Guzman advises enrolling your bills in auto-pay so you can “set it and forget it.”
What Negatively Affects Your Credit Score
Paying your bills late will negatively affect your credit score. The more past due your bill is, the worse off your score is. “Foreclosure is the worst offense on your credit, followed closely by filing bankruptcy,” says De Guzman.
How to Rent If Your Credit Score Is Poor or Nonexistent
There are plenty of ways to rent even if your credit score isn’t the greatest. We’ve already covered tips to rent an apartment if you don’t have a job lined up, and many of them will apply to renters with poor credit histories too.
[tweetthis]Poor credit? Consider a cosigner, offer more money up front, & be honest about your history.[/tweetthis]
These tips include having a cosigner, offering more money up front, being up front about your history with your property manager (maybe you lost your job or were severely ill for a few months) or showing your bank statements or recent pay stubs. If you’ve worked hard to always pay your rent on time these past few years, show your property manager proof of that. You’ll also want to ensure you’re searching for places that either don’t value credit scores above all or are willing to work with renters who don’t have good ones. That will help you narrow down your search and avoid spending time on places that will never rent to you.
How Often to Check Your Credit Score
Each time you check your credit score, you lower it by about 5 to 10 points, according to De Guzman. You’ll want to avoid checking it frequently. De Guzman recommends you look it up about once a year. It’s also a good idea to check it to ensure you haven’t been a victim of fraud or a reporting error. “By tracking your credit report at least once a year, you will spot these mistakes and request your creditors to correct these mistakes,” he says.
For other tips on how to fix your credit, check out this ForRent.com article.