Renting your first apartment can be both exciting and nerve-racking. Often renters are overwhelmed by the volume of forms involved in renting an apartment.
One of the most common things you'll be asked for is a credit check. While this sounds intimidating, it's just a way your future landlord can assess your credit risk. Your credit history is represented by a number between 300 and 900. This score can help a landlord determine if you'll be a good financial candidate.
All previous bankruptcies, current debt load, and your payment habits are combined and represented in a numerical score. Anything between 600 and 750 is average, while scores over 700 are considered good.
Credit reporting agencies receive information in real time. Every time you pay a bill, incur debt, or miss a payment, it immediately affects your score. Your credit report can make or break your chances of renting an apartment, especially if you're a first time renter. A good credit score can make up for lack of rental experience.
If you want to check your score before apartment hunting, you can find your credit score for free at Credit Karma. Don't stress if your score isn't over 600l; you can improve it over time.
If you're trying to improve your credit score:
- Pay all your bills on time.
- Don't carry debt. If you can, pay off your credit cards monthly rather than carrying a balance.
- Don't open new accounts or credit cards unless necessary. Having too much available credit can have a negative effect.
- Keep your utilization rate low. Regardless of your available credit, restrict yourself to using only a small percentage to help boost your credit score.
If your score is low, it could be because you don't have enough credit history. You can build up your score in a few ways:
- Apply for a credit card and make purchases with it.
- Pay your bills every month, on time.
- Take out a loan and make timely payments. If you already have a loan, just keep diligently making payments.
Renters should know their score when applying for a lease. If you have a low score, be honest with the landlord. Sometimes an explanation can make a difference.