I was in the thick of my first apartment hunt, scouring apartments for rent in San Francisco, CA, the first time I experienced the “credit score crush.” The dream-squishing, gut-dropping, “I’m going to have to live in a tent” crush you feel when you realize you’re less financially prepared than you thought — and it could prevent you from renting your dream apartment.
Shoulder to shoulder with all the other fine applicants at my apartment building’s open house, I was quickly clued into two things:
- I hadn’t come bearing prefilled paperwork.
- Even if I’d had said paperwork, I wasn’t exactly in a financially advantageous position.
Needless to say, I quickly learned that having a high credit score isn’t all about qualifying for a mortgage — it also impacts the type of apartment you can rent. When the rental agent asked applicants to attach a copy of their credit report, I turned on a dime and marched straight out of the open house. They wanted to see a high credit score, and I couldn’t give that to them — at least not at that moment.
Good credit isn’t a result of maturity, but building credit takes time and requires a long-term strategy. Follow these steps to prepare your finances now to reap the benefits that come with a high credit score.
Take proper measures to strengthen your credit
In competitive rental areas, landlords and leasing offices may do a tenant credit check and could send your rental application to the rejection pile based on a bad score. Thus, a higher score can help you lock down an awesome apartment. That being said, it’s important to remember that building credit is a process — it won’t happen overnight! Your credit score is calculated based on several criteria (account history, credit utilization ratio, types of accounts, among others), and it’s important to give each component proper attention (including car loans, student loans, and credit card bills).
Here are a few ways to boost your credit score over time:
- Request an increase to your line of credit on your credit card.
- Diversify your accounts by opening a secured credit card.
- Keep your accounts (even inactive ones) open.
- Keep your spending ratio below 30% of your total line of credit.
- Automate payments to avoid late payments to your credit card.
Debt paired with high interest rates can be a daunting challenge. Have a payment plan of attack so you don’t have to carry a balance month to month!
Check your credit report for errors
Even if you’re a responsible credit user, your credit score can take a hit if there are errors in your reports. Learn how to check for errors in your credit report, and if you do find an error, contact your credit-reporting agency immediately to go about correcting the mistake. Not only will it improve your chance of getting the apartment you love, but also you will need the strongest credit score possible if you do eventually buy a home.
Keep a finger on the pulse on your credit score
Although you don’t have to check your credit score daily, checking regularly can keep you abreast of any changes and give you a general sense of which direction your credit is headed (as well as insight into what steps you can take to keep it on the upward trend). The three major credit-rating agencies (Experian, Equifax, and TransUnion) allow you to view your credit report once per year for free. Get in the habit of checking your report one or two times a year — don’t wait until the last minute, when you know a leasing agent will be screening you.
Bulk up that savings account
Having a nest egg is important. Not only will you be shelling out a lot of money at the start of your lease (very likely first and last months’ rent plus a security deposit), but also you’ll want to outfit your apartment with new stuff. (Trust me, you’ve never realized the importance of blackout curtains until you’ve lived in an east-facing apartment.) Start saving now and you’ll be happy you did!
Have you had your credit checked by a leasing agent? How are you working to improve your score? Tell us in the comments below!