We’ve written recently on how you can rent an apartment even if your credit score leaves something to be desired. First, brush up on these tips; they’ll help you get an apartment in the first place. Once you’ve found somewhere to live, you can get to work on repairing your bad credit.
The first step to repairing your credit is to understand it. You are entitled to one free credit report each year from Experian, Equifax, and TransUnion, the three largest credit bureaus. If there is any incorrect information, report it—you don’t want your score to suffer from something you didn’t do.
Always pay your bills promptly. Every time you make a late payment, your credit score gets dinged. On the other hand, if you consistently pay your bills—including your credit cards—on time, you’ll be proving that you “paid as agreed,” or can keep your financial obligations, which is exactly what credit is based on.
Pay off your credit cards. Although this may take time, your score will recover somewhat once your balances are below 30 percent of the credit limit on each card. The sooner you can pay them down, the better.
Also, if possible, always pay your entire credit card balance each month. With most cards, a balance, or money owed, comes with a hefty interest rate. For example, if you have $1000 consistently owed on a card with an 18% APR, at the end of the year you’ll owe $180 extra just from interest. The more you owe, the more you pay. But if you can get your balance down to zero each month, you’ll dodge that bullet.
If you file for bankruptcy, use it as a chance for a fresh start. Practice these good credit-building strategies from the get-go. Open a savings account, and get a secured credit card.
Another method for finding long-term housing with bad credit is Rent to Own. Each month, while you’re reestablishing good credit, part of your rent goes towards a future down payment on the house you are currently leasing. This is a good option for people who know they want to own a particular home, but don’t have a good enough credit score to qualify for a loan or mortgage.
Have you improved your credit while renting? Tell us how here or on Facebook!