When you find the perfect home, car, or other investment or purchase, there is nothing more disappointing than getting a big DECLINED when you attempt to arrange financing. What happened? You thought your credit was doing okay, but then you go to CreditKarma.com, your score is in the low 500s.
Typically, any credit score below 600 is an automatic rejection from any financing partner or property manager. Are you doomed to reside in the low 500s for life, unable to get the financing you need to improve your life or your business, or do you become proactive and try to resolve the issue?
Typically, Only Negative Events Are Reported
What causes credit scores to drop? Too much debt, bankruptcy, late payments, evictions, and foreclosures, are all common challenges that decrease someone’s credit score. Don’t all the positive things you have done even out the balance? Generally no, since credit bureaus only look at negative reports along with the number of solicited and unsolicited inquiries.
4 Ways to Increase Your Credit Score
Property management experts can help direct you to even more ways to help improve your credit, so the next time a landlord or anyone else screens you your new and improved credit score will make you look even more sharp and responsible.
What can tenants do to bring credit scores up into the 700s?
- Pay all your bills on time.
- If you see a charge or negative comment on your credit report that you don’t recognize, dispute it. All three credit bureaus have mechanisms to dispute charges.
- Keep credit card balances below 35% of your available credit.
- Use a credit reporting service to pay rent.
Positive Credit Reporting for Renters
Credit reporting services will actually report positive information to the bureaus. Typically, only negatives are reported, but for a monthly fee, a credit reporting service will collect information about your lease or mortgage and report on-time payments which can counter negative reports. The only problem is that if you are late on your rent or mortgage payment, it counts double against you. You must keep the rest of your credit clean for a credit reporting service to be truly beneficial.
There are several services available that will report your on-time payment to one or all three credit bureaus for a fee each month. If you have poor credit from past challenges, but can now afford a credit reporting service, this is a worthwhile investment. As you pay your rent on time and your positive reports stack up, and you avoid late payments and other negatives, your credit score will rise.
Eventually, even someone who started with poor credit will be able to afford a mortgage and become a homeowner. Imagine applying for financing with a 750 credit score. Financiers will fight for your business and give you special concessions to strengthen your relationship as a client.
