1. Credit Scores can Actually Range From as Low as 300 up to about 900
Although credit score can range slightly, most credit reporting sources have a range of about 300 to 900. Below you can find a credit score distribution according to FICO.
As you can see, 58% of Americans have a credit score of 700 or above, while 42% have scores below this amount. Where do you fall in? You should know before you look to rent your next apartment. You can check your credit completely for free anytime on sites like Credit Karma. This site in particular includes your Equifax and TransUnion credit scores. Why not have a look if you haven’t checked in a while?
2. Most Lenders Require 720, with Some Requiring 740 and Above
Most people, at some time in the future, will need to secure a loan whether for auto or purchasing a home. How can you make yourself more attractive to lenders? Most will require at least a credit score of 720. But each lender has different criteria and some may want to see a higher score. As a general rule of thumb, a score at 650 or below will typically trigger a more in-depth look into your history.
Keep in mind that your credit score is just one of the factors that lenders take into account. There are a number of other factors they can look at to make a decision.
3. Apartment Renters can Overcome a Low Credit Score with Other Factors
Credit score is a big criteria landlords weigh when they see your rental application. So, what can you do if your score is low?
Make sure you meet or exceed the other criteria required by the landlord and you can still have a good chance of being accepted.
These items may include
- Be able to show multiple years of unbroken rental history with positive recommendations from your previous landlords
- Be free from any evictions on your record
- Have a monthly income that exceeds three times the monthly rent amount. For example, if the monthly rent is $2,000, make sure your total gross household income is $6,000 (or more!)
If worse comes to worse and you are still not accepted based on the landlord’s criteria, you may need to pay extra security deposit or have a co-signer ready with a good credit score who can vouch for you.
4. Late or Missing Payments Aren’t the Only Ways you can Damage your Score
Making payments to your credit card on time is not necessarily enough to ensure that your score will stay high. There are many other common mistakes people make that hurt their score.
- A big mistake people make is having a high balance in relation to your credit limit. If your limit is $5,000 and you constantly are spending up to $4,800 each month this can have an adverse effect on your credit score.
- Another common mistake is maxing out your cards. Keep in mind that credit bureaus don’t look favorably on this because it means you are spending a lot in relation to your income.
- Having too many credit cards also can bite you. From a lender’s perspective, the more credit cards you have, the higher amount of debt you are able to put yourself into.
- Finally, too many hard credit inquiries can damage your score. Credit inquiries commonly occur when a lender runs your credit to evaluate you for a loan. Too many inquiries are an indication that you are unable to secure a loan from your first option and that you will likely take on more debt in the future.
If you avoid these common mistakes and show that you can continue to consistently pay off your current credit balances and loans, you will have a higher credit score.
5. Cosigning a Loan or Apartment Lease can Come Back to Bite you in a BIG Way
Be extra careful when you cosign a lease with someone else. You are doing more than merely vouching for the person. You are now personally liable for any issues with apartment rent payments or evictions that arise. Yes, this means if the rent doesn’t get paid the landlord can put liens on you. Cosigning will also damage your credit score if something goes wrong. By cosigning, you are agreeing to be responsible for the rent being paid for the duration of the lease. For this reason, always be sure you can trust the person you are cosigning for. And even more importantly, be sure you are ready to step in if they can’t cover the rent themselves.
6. Holding a Joint Account with Someone with Bad Credit can Negatively Impact your Score
Think twice before you enter into a joint account with someone else who has less than stellar credit history. Their faux pas can spill over and negatively impact your own credit score.
7. You Don’t Have Just One Credit Score
Your credit score is not a single number. Depending on where you get your score from, you could have as many as three different scores representing your credit. This occurs because all of your financial activity is not always reported to all three credit bureaus. Also, the timing that this information is reported to each bureau may vary. For this reason, your score can be different depending on where you get it from. But rest assured all the sources will have moderately similar scores for you. That’s why some evaluators take an average of your credit scores from multiple sources.
8. Your Credit Score is Made Up of Three Categories
Generally speaking, there are three categories that go into your credit score:
The first is account info such as credit and loans. Second are public records on you like liens and bankruptcies, and finally there are credit inquiries that you’ve made. It’s important to realize that personal information such as address, age, gender, race, etc. does not impact your score.
9. Making Regular Rent Payments for your Apartment can Actually Work to Build your Credit
The action of just making monthly rent payment on time can build your credit score. This helps build a track record for yourself and shows that you are responsible enough to consistently pay your rent. The only caveat is that your landlord needs to report the rental history data to the credit bureaus. If your landlord isn’t doing this currently, services such as RentTrack can make this process easy. You can start improving your credit score with every rent payment you make.
10. Your Credit Score is Recalculated each Time it’s Pulled
Most people make the mistake of thinking that their credit score already exists and that each inquiry is allows you to see that number. But actually, the number is re-calculated freshly each time an inquiry is run. This means that the number can change each time the credit is run depending on the information available at the time. Even with this in mind, it’s not normally useful to look at your credit more than once per month. Look at your credit more frequently than this, and you are not likely to see any significant changes.