To ensure that their renters are reputable and reliable candidates, most landlords rely extensively on various tenant screening reports. After all, a rental property is a significant investment, and landlords want to protect their investment by ensuring that they will be paid monthly rent. The steps outlined here can help almost anyone's credit.
1. Establish Your Credit File
Opening new accounts that will be reported to the major credit agencies (TransUnion, Equifax, and Experian) is a vital initial step in building your credit file—most major lenders and card issuers report to all three. You can't start creating a great credit history until you have accounts in your name, so having a few open and active credit accounts can be helpful.
2. Don't Forget making Payments
Your payment history is one of the most important factors in determining your credit score, and having a long history of on-time payments can help you achieve high credit scores. Make sure you don't miss any loan or credit card payments by more than 29 days, since late payments of more than 30 days may be reported to credit bureaus, which will reflect a negative effect on your credit score.
Setting up automated payments for the minimal amount due will help you avoid skipping a payment (provided you don't overdraft your bank account). If you're having problems paying a debt, contact your credit card company straight away to discuss hardship alternatives.
3. Make Up For Past-Due Accounts
Getting your bills up to date will help if you're behind on them. While a late payment might stay on your credit record for up to seven years, keeping all of your accounts up to date will help your ratings. It also prevents future late payments and late fines from being reflected on your credit report.
Talking to a credit counselor and enrolling in a debt management plan (DMP) might be a useful alternative for people who are struggling with credit card debt. The counselor may be able to negotiate cheaper payments and interest rates, as well as encourage credit card companies to bring your accounts current.
4. Reduce Revolving Account Balances
Even if you are not in debt, having a high balance on revolving credit accounts might result in a high credit utilization rate and harm your credit scores. Credit cards and lines of credit are examples of revolving accounts, and keeping a low balance on them relative to their credit limits will help you enhance your credit scores. Those with the best credit scores have credit use ratios in the low single digits.
5. Reduce The Number of New Account Applications You Submit.
While you may need to open accounts to grow your credit, you should normally restrict the number of credit applications you submit. Each application can result in a hard inquiry, which may lower your scores slightly, but inquiries can accumulate and have a cumulative effect on your credit ratings. Opening a new account reduces the average age of your accounts, which may lower your scores.
Despite the fact that enquiries and the average age of your accounts are minor scoring factors, you should limit the number of applications you submit. One exception is when you're looking for a low interest rate on a specific loan, such as a car loan or a mortgage. Credit scoring models understand that rate shopping is not a dangerous practice and may ignore some enquiries if they occur within a few weeks.
There are numerous options for keeping up with your current credit score, as well as numerous ways to raise your score if it is low or you have no credit history. Furthermore, if you have previous landlords who are prepared to serve as references showing your rent was paid consistently and on time, you may be able to mitigate some of the impacts of having a less-than-stellar (or non-existent) credit record.
Source: Experian Information Solutions, Inc.
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