If you’re currently renting, you may have eyes on owning one day. To make that dream happen, you’ll need to protect your credit and finances and make them as strong as you can.
Only by having a high credit score and excellent finances can you hope to qualify for a mortgage when you’re ready.
The best way to protect your credit and finances as a renter is by understanding the entire rental process and how it impacts your financial life.
This quick guide is meant to give you an idea of how to safeguard yourself and make the most of your credit opportunities as a renter.
1. The credit check process.
Most landlords require a credit check before allowing you to rent from them, but turning over your personally identifying information can potentially expose you to fraud or identity theft.
Even if the landlord does not have bad intentions, he might not be as careful with your information as you would be. Instead, use a service that supplies all of your credit information but strips out things like Social Security numbers and banking information.
2. Avoid rental scams.
When you’re in the process of looking for the perfect rental, you’ll probably use many different sources to find it. Some online rental ads are posted by scammers looking to get hold of your information with an eye on stealing your identity.
Ways to avoid falling victim include never providing your Social Security number or banking information over the phone to a “landlord” who asks for it.
“It will give you a better chance
at one day owning a home.”
3. Getting the most out of your good payment history
Building a good credit history is a matter of understanding how the credit reporting process works.
As a renter, you’re responsible for paying your rent on time. However, the landlord doesn’t report these on-time payments to the credit bureaus, so you don’t get credit for them.
Recently some services have begun allowing a landlord to report rent payments to them, which are then reported to the credit bureaus. This can help to build your credit score – as long as you pay your rent on time.
4. Know who reports to the credit bureaus (and who doesn’t).
Certain payments you make as a renter – utilities, cable, phone – are almost never reported to the credit bureaus, so they have no impact on your credit score.
However, if you neglect to pay them and they go to a collection agency, this will get reported and will have a negative impact on your credit score. Be sure to deal with any past due bills before this happens.
5. Keep a careful eye on your credit report.
Regardless of how careful you’ve been to protect your personal information, there is always the possibility some of it has been compromised.
To help make sure your identity is safe, you should periodically check your credit report for any activity that wasn’t initiated by you. Immediately report any suspicious or fraudulent activity you see.
6. Paying your bills on time
The best thing you can do to protect your credit and finances as a renter is to pay all of your bills on time. You never know which late payments will find their way on to your credit report. Once there, they will do damage for quite a while.
Get in the habit of never paying late and your credit score will be better off for it.
Protecting your credit and finances while you’re renting is important. It will not only give you a better chance at one day owning a home, but it will also ensure you don’t fall victim to identity theft.
Follow these guidelines and you should find yourself with an increasing credit score and a good payment record on your credit report.
Photo source: rentcafe.com
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