Tips To Establish A Solid Credit Score – Renters 101
Establishing a solid credit score is important for many reasons. Whether you are buying a car, getting a job or even renting an apartment, your credit score will have an impact. But, what if you are a new graduate or young adult living with your parents? How can you establish your credit and put smart financial practices in place so you can buy that car, get that job and rent that apartment?
When renting an apartment it is standard to run a credit check as part of the leasing application process. If you don’t have a credit history, your report may come back with an insufficient FICO score. This is better than bad credit but it doesn’t mean it will be easy to rent an apartment. You are a risk because your money skills are unknown and therefore unpredictable.
To build up your credit score and make your apartment search process easier here are a few tips to improve your credit score before you try to find an apartment.
Make a Plan
Establish a financial plan for your first rental. With the most important cost being the total rent. Sure, the most luxurious apartment is attractive but not a wise choice if this is your first place and your budget says no.
Another good tip is to live below your means. A “housing” rule of thumb is you should not pay over one third of your gross income in rent. And remember rent is only one component of your expenses. You will need to factor in and pay for utilities, renter’s insurance, and parking. Be sure to ask what is covered in the monthly rent so you have money left to live on.
Open a bank account. By showing a pattern of saving money you show fiscal responsibility. Leasing companies will want to see these financials. It proves to your landlord that you can cover the costs of moving and living in your apartment.
You will need to prove to your prospective leasing company you possess the financial means to afford your place. That means that when searching and applying for your apartment, you will need to show proof of your income and savings. Pay stubs, bank statements, a job offer letter, and/or tax return forms are all acceptable way to verify your financial abilities.
We would all love to live in a penthouse with a beautiful view but most of us live on a 1 – bedroom budget, so don’t waste you or your leasing agents time by requesting to see apartments you can’t afford.
Also, think about what your apartment priorities and needs are. Then, do your research. For example, if you work downtown and do not own a car, a priority might be to find an apartment located close to public transportation.
Apartments are in hot demand, so if you are unsure of what you need or your list of needs is a mile long, chances are that lovely, affordable apartment 3 blocks from the Blue Line will rent by the time you realize what your best rental option is.
Understand Your Credit Score
Look at and understand the credit scoring system. Monitor it. Learn how to build it. Everyone may access their credit report for free once a year. Sites like Credit Karma are useful tools that will give you insight into your credit standing. Also, many don’t realize that there are multiple credit scoring models. FICO and Vantage are just two versions and your personal credit score can vary within each system. There are three major credit bureau’s, TransUnion, Experian, and Equifax. Each of these bureaus has different data on you, which is why scores vary. So, what this all boils down to is that just because you have one score with one company does not mean you will have the same score with another company. Bottom line, having and maintaining a score within a good credit range or better is the goal.
Also, if you plan on living with a roommate their credit score, if bad, can impact your apartment hunt. Your good credit score will not negate your roommate’s bad credit score. It makes sense to ask your potential roommate those tough financial questions before agreeing to live with them.
It is your first apartment, not your parents or even your five best friends. Their opinion doesn’t matter because it will be your home. Yes, you would love to take everyone’s thoughts into consideration but this decision is yours and yours alone to make (or with your roommate). Take our suggestion and don’t drag everybody along with you during your apartment hunt, you will thank us for this sanity saving advice.
Oak Park Apartments
Finally, every apartment management company has their own rules and regulations regarding lease applications, credit scores and individual processes. With over 1500 apartments to manage, we, at Oak Park Apartments, want to be clear about our application policies and procedures. This helps us lease our apartments effectively with respect to your time and ours.