There are many things we do in our financial lives that impact our credit, both positively and negatively.
But it may surprise you to learn about some of the things that can negatively impact your credit score – things you probably haven’t considered.
Take for instance, the decision to rent a house or apartment.
When we decide to rent, most of us will shop around and check out a few places, looking for that special one that feels like home.
In doing so, we’ll probably fill out a few rental applications and credit check authorizations along the way.
And if we happen to miss out on some of the places we were interested in, we’ll likely fill out more applications.
This is where we can get into trouble.
Every time we authorize someone to run a check of our credit history, it generates what’s called a “hard inquiry” of our credit.
According to FICO, the creators of the most widely used credit scoring system, too many of these hard inquiries can affect our credit score.
Each one of them can actually drop our score by as much as five points! That might not seem like a lot, unless there are a lot of them or our credit score isn’t that great already.
“Renting doesn’t hurt your credit
if you go about it the right way.”
So what can you do?
The best thing to do when you suspect there may be a lot of hard inquiries by landlords or leasing agencies is to hold off authorizing them to check your credit until you’ve made a final decision to rent.
Only then should you give them permission.
You can also ask what your chances are of getting the dream rental you’re looking at. If it’s less than 50 percent, maybe it’s not worth the risk of a hit on your credit.
Other ways your credit can be hurt by deciding to rent are very rare, especially if you are a conscientious and responsible person.
For example, it’s almost impossible for an individual or even a leasing company to report negative information about you directly to the rating agencies.
However, if a court judgment is made against you for non-payment and monetary damages are assessed, that may end up on your credit report and lower your credit score.
For the most part, renting does not hurt your credit if you go about it the right way.
By making sure you have a very small number of credit inquiries run, you’ll avoid the potential of any hit to your score. Good luck on your search!
Photo source: inman.com.