Although it is easier to rent a home than it is to buy one, there are still plenty of credit checks that you’ll need to pass as a renter. If you know you need to improve your credit, it’s wise to put these plans in place before you start your search for a new home, as this will improve your chances of being accepted by a landlord. Of course, renting with bad credit is possible, but to qualify for the best apartments and houses and to look like a good tenant in the eyes of a landlord, it’s far better to have a good score. With that in mind, here are some ideas on how to improve your credit score so you have all the choices you need when it comes to finding a new home to live in.
Use A Credit Card
It might seem strange to say that to improve your credit, you should use a credit card regularly. Wouldn’t that cause your credit to go down? The truth is that if you use the credit card sensibly, it can help you with your credit score because it shows that you can borrow and pay back the money without any problems.
The key is to only use the card for small purchases and then pay back the entire amount each month. The problems start when you use the card for much larger purchases, or you only pay the minimum each time – this can hurt your credit, and it will push you deeper into debt, which you’ll want to avoid as much as possible.
Close Some Old Accounts
Perhaps you have a lot of old credit cards and store cards that you no longer use but that have credit amounts available on them. If so, it’s worth closing most of these – just not all of them.
When you are looking at how to improve your credit score because renting with bad credit isn’t ideal, reducing the overall amount of credit available to you certainly has its advantages. Lenders like to see that you don’t have a lot of old cards because even if you’re not using them, having the credit there will make them think you could use it in the future, and that would be problematic.
It’s a good idea to keep one or two old cards as emergency funding options, but everything else that you no longer use should be closed. Your credit score should improve as a result, and you’ll look like a much better prospect to landlords.
Look For Mistakes
No one and nothing is perfect, and that means automated systems, including credit score bureaus. It could be that there are mistakes on your credit report that are causing your credit score to be lower than it should be. This is why you need to regularly check your credit report to make sure there are no mistakes.
If you do spot an error (which could be anything from the wrong address, to a misspelling of your name, to a missed payment when you know – and have proof – that you made it on time, as well as much more), you’ll need to contact the credit bureaus and potentially the lender in question immediately. These mistakes can take some time to put right and even longer show on your report, so the sooner you act, the better if you want to improve your credit.
Don’t Use A Credit Card In An ATM
Even though we mentioned earlier that it was good to use your credit card once in a while as it shows you can borrow money responsibly, it’s not so good if you use it to withdraw cash from an ATM.
Not only will this cost you a lot in fees and interest, but it shows lenders (and therefore landlords through your report) that you don’t know how to handle money – or at least, that’s how it will look. Having to withdraw cash on a credit card rather than from your bank account could make lenders think that you have mismanaged your funds and have run out, thus you’re turning to emergency measures. It’s not a good sign to them, and you should avoid it if you don’t want to try renting with bad credit.
Don’t Apply For Too Much Credit
When you apply for credit, the lenders will carry out a hard check on your finances. This hard check will be noted on your credit report, and although it’s not a bad thing in itself – if you want to borrow money, it’s necessary – too many of them in a short space of time, and particularly too many refusals for credit after a hard check, will reduce your credit score, and that’s not something you want to happen when you’re trying to rent a property.
If you are looking for a new loan or credit card, it’s best to wait until you have been through the checks needed to rent somewhere, as a dip in your credit report won’t be so harmful.