If you’re in the market and searching for a property to rent, it’s important to look at your credit score first. Many potential renters don’t realize they can check their credit or improve it, but you can do both.
First, pull your credit report here. Everyone gets one free credit report a year, so don’t hold back. Once you know your credit history, you can take the necessary steps to improve it.
Why your Credit Score is Important
You may wonder why your credit score is so important.
Here’s why.
It’s the first thing landlords look at when you apply to lease a property. This shows how you pay your bills. If your credit score does not meet the application criteria for the chosen property, they may decline your application without looking at it further.
Think of it as your first impression of the landlord. You want it to be as good as possible or you risk not getting approved.
Here’s how.
How to Increase your Credit Score
Your credit score changes monthly. With these simple changes, you can increase your credit score and your chances of approval.
Bring your Accounts Current
If you have any late payments reported on your credit report, get them current fast. Late payments can hurt your credit score the most since your payment history makes up the largest portion of your credit score.
Pay your Debts Down
The next largest part of your credit score is your credit utilization. This refers to the number of credit lines you have outstanding. Any amount over 30% of your credit line or $300 for every $1,000 in the credit line, hurts your credit score. Work on paying your debts down and watch your score increase.
Don’t Close Old Credit Card Accounts
It sounds odd, but keep your old credit card accounts open. They help your credit age. Your credit score improves when you have older credit accounts. New accounts don’t have a history and can make you a higher risk.
Don’t Apply for New Credit
If you’re applying to lease a property, avoid applying for any new credit. New accounts bring your credit score down and increase your credit utilization.
Wait until after you have been approved, secured your new rental property, and have moved in to open up a new credit card to furnish your rental or to buy that new car. The new credit will only decrease your score and your chances of mortgage approval.
Final Thoughts
You don’t need a perfect credit score to get a rental property, but the higher your score is, the more likely you are to get approved. Working on your credit score before you apply increases your chances of approval. It also helps you get better terms and interest rates.
It may take a few months to see a change in your credit score, though. Don’t expect changes overnight. If you want to apply for a rental property, I suggest pulling your credit before you apply for a rental property to give your score enough time to improve.
Did you know, that when you rent a property from PG Management Group, that we report your rental payment history? Paying your rent on time can actually help you improve your existing credit score.
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