Smart Tips to Improve Your Credit Score Prior to Submitting Rental Applications
Learn simple and concrete steps you can start taking now to improve your credit score and become a more attractive rental applicant.
Looking for tips to improve your credit score before beginning your search for your next rental home? Credit score repair does not happen overnight. If you are planning to fill out rental applications with property management companies in the near future, the time to start improving your credit score is now. Begin by using the tips below to help increase your FICO score. To learn more about the Red Door Company tenant application screening process, please do not hesitate to contact us.
Check Your Credit Report
Credit score repair begins with knowing what is on your credit report. Never reviewed your credit report before? If you want to improve your credit score, now is the time to start. And don’t worry, requesting your credit report will not harm your credit score.
Each year, you can request a free credit report from the three major credit bureaus: Equifax, Experian, and TransUnion. Instead of ordering all three free credit reports at once, spread out your requests over the year by requesting a report once every four months.
Dispute Credit Report Errors
Once you have a free copy of your credit report in hand, review it carefully for errors. While this process may seem tedious, correcting errors is an important step to begin improving your credit score. When reviewing your report, start by checking to make sure that there are no late payments incorrectly listed for any of your accounts and that the amounts owed for each of your open accounts are correct. If you find errors on any of your reports, dispute them with the credit bureau.
Pay Bills On Time
While this seems obvious, paying bills on time is crucial when you want to improve your credit before submitting a rental application. Your payment history, including the bills you pay late or skip altogether, accounts for up 35% of your credit score. For those of you who are forgetful and more prone to missing due dates, take a few moments to automate your payments.
If you are having trouble paying accounts on time due to financial difficulties, always contact your creditors and let them know. Nothing is embarrassing about asking for help. Most creditors are willing to work with you by forgiving a late payment or working with you to create a payment plan. Do your best to avoid allowing accounts to go into collection because this will hurt your FICO score and stay on your records for seven years.
Create a Payment Plan to Reduce Debt
The amounts owed on accounts determines 30% of your credit score. There are some factors that contribute to amounts owed, which can harm your credit score. Using a high percentage of available credit and having a large number of accounts with amounts owed can indicate you are at an increased risk of missing payments which, in turn, lowers your credit score.
Additionally, when a high percentage of your available credit has been used, this can indicate that you are overextended and more likely to make late payments or miss payments. To improve your credit score before applying to rent a home, create a payment plan and begin reducing the amount owed on your accounts. Look at the interest rates on your credit cards and focus on paying down the cards with the highest interest first.
Revolving Credit – How Much You Have vs. How Much You are Using
Another factor in your credit score, one which falls into the 30% mentioned above, is how much revolving credit you have versus how much you’re actually using. The smaller that percentage is, the better it is for your credit rating. A good percent to aim for is 30 percent or lower.
Even if you pay the balance of your credit card(s) in full each month, your credit report may show a balance on those cards because the total balance on your last statement is generally the amount that will show in your credit report. That higher utilization rate will negatively affect your score. You can improve your FICO score by paying twice a month – once just before the statement closing date and a second payment just before the due date.
Open a Credit Card Account
If you do not have a credit history or need to improve your credit score, opening a credit card account can help boost your FICO score. However, opening many credit cards in a short period can also harm your credit score. The key here is to be smart when it comes to new credit.
For someone who has little to no credit history, opening a credit card, using it wisely and paying on time is a smart way to improve a credit score. Someone with credit history and multiple lines of credit can also benefit from opening a new credit card account if they manage their spending and payments responsibly.
Leave Good Old Debt on Your Report
Your length of credit history represents 15% of your FICO score. While accounts you have paid off and no longer use may eventually come off of your credit report, you shouldn’t be proactive in removing those accounts if you paid them on time when making payments. The creditors and debt that you’ve handled well and paid as agreed are good for your credit. So remember this when reviewing your credit report: the longer your history of good debt, the better it is for your credit score.
If you have any questions about these tips or the rental application process, don’t hesitate to contact the experts at Red Door Company. We are always happy to help.