Improving your credit score as a tenant:

What is credit?

Based on your credit history and other financial data, your credit score is usually a number between 300 and 850 that indicates how likely you are to repay your debts. This score is of significant importance and is likely to become a major factor in your life. For instance, lenders often consider this score, among other criteria, to assess your eligibility for credit. Therefore, it is extremely important that you can build up and maintain a high credit score, in which is not going to deter any Lenders from granting you with the credits that you need.

How to build credit?

There are several effective strategies for building a credit score. One of the most critical factors is ensuring that all bills are paid on time, as payment history accounts for approximately 35% of your overall credit score. Another key practice is maintaining a low credit utilization rate; it is advisable to use no more than 30% of your total available credit. Additionally, it is beneficial to keep previously opened credit accounts active, as the length of your credit history contributes positively to your score and reflects financial reliability. Lastly, it is important to avoid submitting multiple credit applications within a short period, as this can lead to multiple hard inquiries, which may negatively affect your credit score.

Payments that contribute to your credit score typically include those made toward utilities, credit cards, loans, and mortgages. While mortgage payments are routinely reported to credit bureaus and positively influence your score, many assume that rent payments would have the same effect. However, rent payments are not automatically factored into your credit score. Fortunately, this can be addressed through various third-party services that report rental payments to credit bureaus on your behalf. A quick online search will reveal several reputable companies that offer this service, enabling renters to build credit through consistent, on-time rent payments.