Having and Mantaining a Good Credit Score

Many years ago, my young bride and I went to rent an apartment.  The landlord told us, “You look like a nice young couple,” and that was all we needed to be in order to sign a lease and move in.  Today, renting an apartment is a little more complicated, and a credit score check is often part of the process.  Landlords know that a renter with a good credit score is more likely to pay their rent on time, than one with a lower score

When my son was young, I knew some day he’d be going to college and moving out and starting his own life.  So, as dutiful parents, we began planning for his future.  We did obvious things, like start a college savings account for him. But we did something else, too. We helped him establish a credit history, and taught him how to build a good credit score.

If you’re over thirty, or even over 25, you probably have a credit score, whether or realize it or not.  But what about young people just starting out in life.  Not too many teen agers are making monthly payments on credit cards or utilities.  But they can, and should be doing this in order to help establish a credit rating for themselves.

For example, when my son was a teenager, we put his cell phone in his name.  I paid the monthly bill, but cell phone companies report to the major credit bureaus, and that’s how a credit history is created.  Another thing a parent can do is to help a teen procure a credit card, say with a limit of $500.  In order for this to be actually in the teen’s name, you may have to secure the card by putting $500 in a savings account with the issuing bank.  Have the teen use the card for small personal purchases, and make sure at least the minimum payment is made every month.

When my son went to college and lived in an apartment community, again, we put the lease in his name, even though we paid his rent.  I co-signed on one vehicle he financed. After that, he was able to buy a car entirely with his own credit history.

So, the first goal is to establish credit.  You do this step by step.  If you can get a bank credit card, even with a small credit limit, and you use it and pay it off on time, the bank will start to raise your credit limit, and this is good for your credit score.

The exact method the big three credit reporting companies actually figure your credit score is not shared with the public, but some things are known.  The biggest one is just paying your bills on time.  But that’s not enough.  Having credit cards helps, but running your balance up to your credit limit seems to hurt your credit score.  Opening too many credit accounts also seems to hurt your score.  Even closing out a credit card can lower your score because it reduces the amount of potential credit you have.

While there is no quick fix to raising your credit score, doing these three things will help you over the long haul:

  1. Pay your bills on time
  2. Don’t keep your credit card balances too close to your credit limits
  3. Don’t apply for a lot of credit.  Every time you do, your credit score will drop a little.

 

Lower your Loan Rates by Simply Paying your Rent

Credit scores

Why is is important to build and keep a high credit score?  Because sooner or later, you’re going to want a car loan, or new credit card.  Or, you might want to take advantage of an offer for no payments for six months or a year on a major purchase.  Whether or not you’ll get the loan and how low the interest rate might be, depends on your credit score, the higher the better.

Earlier this year, One of the nation’s largest credit reporting companies, Experian, announced it would begin including rental payments in its credit score formula.

This means that paying your rent on time can help boost your credit score. On the other hand, paying late, may hurt your credit score. With credit scores, the higher the better.

Even some auto insurance companies base your rates on your credit score, and now, some employers have been using them when assessing job applicants, although this is getting the attention of government agencies..

In response to Experian’s decision, various websites have started up to help consumers make the most of their rental payment from a credit score angle. Williampaid.com, for example, will not only pay your rent for you automatically-it deducts your payment from your bank account for a $1.75 monthly fee-it will also report your rental payment to FICO, the main credit-monitoring firm, for $2.50 per month.

There’s also a new Website called RentReporters.com that says it can verify residential rental payments of 100 millionU.S.renters and transfer that information to consumer credit reports, thus helping them to boost their credit scores. (Estimate your credit score for free.)

At any rate, it pays to have a good credit score, and now the simple act of paying your rent on time can help you earn one.  One good way to do that is to use our online pay option.  It’s really easy, so give it try.