No matter if you’re renting in San Jose, CA, or Austin, TX—your credit score will matter. There’s no getting around the fact that landlords and apartment property managers can put a lot of weight on that one number when determining whether you can handle making your monthly rent.
But you may not know why your credit score is so dismal, especially when you’re trying to play it safe and maintain credit worthiness by paying your bills on time and in full. Aside from forgetting to pay bills, what can ruin your credit? If you’re on top of payments, why is your score still lacking?
If you’ve checked your credit score only to find yourself shocked and dismayed by the result, your score may be suffering from one of these sneaky things that can ruin it.
1. Generating too many inquiries
Shopping around before choosing an institution for a car loan can help you find the best rate—and that can translate into thousands of dollars in savings (if not more!) over your loan’s lifetime. But while you may be saving, it’s best to use moderation. Here’s why.
When you receive a quote on interest rates, lenders pull a hard inquiry that shows up on your credit report. If you request these inquiries over a period longer than 14 days, each quote shows up individually. When you’re comparison shopping for a loan, gather your quotes in a short period (ideally within two weeks). That way, your credit will take less of a hit.
2. The little things can add up
Unpaid bills from a variety of sources can cause your credit score to plummet if they’re unresolved. Think that library late fee or medical invoice from 15 years ago doesn’t matter anymore? It could, if the library system turns that account over to collections or marks it as “delinquent.”
In most cases, this is an easy fix and just a matter of settling the outstanding payment. To check for these issues, pull a credit report—you can get one for free each year from the three credit-reporting agencies (Experian, TransUnion, and Equifax).
3. Incorrect information
Let’s get real: You’ll probably want to pull your credit report for more than to see if you owe your librarian a few bucks. Errors occur and businesses make mistakes. If your credit report is harboring incorrect information about your financial records, this could drag down your credit score. If your report has an error, call the credit bureau that issued the report and file a claim. Correcting errors can be long and arduous, but it’s worth the effort.
4. Using your credit a little too much
If you use your credit cards for everyday spending and pay off your balances—on time and in full each month—you may be wondering why your credit score is still suffering. Even if you’re paying it off responsibly, maxing out your credit card can harm your score more than you might think. What matters here is how much credit you have and how much credit you’re using. For example, if you have a $1,000 line of credit and you charge $999 each month, you’ll earn a black mark on your credit score even if you pay off every dime when the bill comes due. This balance of limit versus spending is known as a credit utilization ratio. Maintaining a high credit utilization ratio will hurt your score. If possible, try to keep balances low on your lines of credit.
5. Not using credit at all
The silent way to ruin credit is by not using it at all. If you’re afraid of tripping up and getting into a financial mess, or if you’ve been scared off the idea of using credit by financial “gurus,” you may negatively impact your score. With no credit history, there’s nothing to show that you’re a responsible user of credit who can manage balances and payments. Inactive accounts may even default to closed over time, and that too can ding your score. It might not be fair, but the fact remains that those looking to rent an apartment need to develop and maintain strong credit scores. If you want to secure the best apartments out there, be wary of these credit score pitfalls that can hurt your score.
Originally published December 19, 2016. Updated September 20, 2017.