Less than perfect credit can cost you hundreds, even thousands, of dollars more each year in interest and financing costs. Less than perfect credit can also limit your ability to secure credit and increase the amount of time you spend waiting for credit approval. As a renter, building and maintaining a solid credit file will help save you money and provide you with financial flexibility!
Here is a real-world example: Let’s say you’re buying a car that costs $15,000. You plan to trade-in your existing vehicle or you’ll provide a $3,000 down payment, so you’ll still need to finance $12,000. If you have an established credit history and minimal or no negative credit lines, you will probably qualify for the lowest interest rate–let’s say 3.99%. However, if you have less than perfect credit, you will probably still be offered financing, but at a much higher interest rate–perhaps as high as 9.99%. In this example, the 9.99% interest rate offered will cost you $43 more every month and $1,481 over the three-year term of the loan.
The car loan example can be carried over in some ways to when you’re looking for an apartment, too. If you are a renter with less than perfect credit, some properties may reject your application or require you to pay an additional security deposit, a security deposit fee, or obtain a guarantor for the lease. All of these will slow down your search for an apartment, increase the already high stress and anxiety of moving, and in the end cost you more money.
Here are Rentometer’s top seven tips on what you can do to build and maintain positive credit:
- The most important thing you can do is to pay all your bills on time! That means paying your bills by the stipulated due dates. Making on-time bill payments goes a long way toward illustrating your good payment history to future landlords.
- Keep records of all bill payments just in case there is a problem down the road. By having written documentation to help verify and prove that payments were made on time you’ll be in a better position to challenge any erroneous blemishes on your credit report.
- Find out if your landlord reports your rent payments to one of the credit bureaus. As a renter, your rent is one of your biggest financial obligations, and you should get credit for meeting that obligation.
- Ask your landlord to report rent payment to the credit bureaus if she doesn’t do so already.Let your landlord know that it’s important to you as a renter to have your timely, consistent rent payments reported.
- Continue to pay your rent on time, even if your landlord currently does not report your rent payments to one of the credit bureaus. When landlords do start reporting, historical data is usually picked up and reflected in your credit file.
- Use an independent rent verification service if your landlord does not report your rent payments. There are services that will verify and document your historical rent payments–some even report them to at least one of the credit bureaus.
- Monitor your credit report on a regular basis to ensure that you are getting credit for your on-time payments and that there aren’t mistakes on your credit report. Keep in mind, too, that you are entitled to a free copy of your credit report once every 12 months from the nationwide consumer reporting companies—Equifax, Experian, and TransUnion. Visit annualcreditreport.com for additional information.
Following these tips can help renters build and maintain a solid credit file, which in turn, can help you save money and enjoy financial flexibility.
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