Most of us are aware that our credit score has a huge influence in determining interest rates on an auto loan or even a mortgage, but some people aren’t really aware of the impact credit scores may have on your ability to rent an apartment in Los Angeles.
According to our friends over at RadPad, your credit score can make or break your chances of getting into an apartment, as well as being able to take advantage of move-in specials.
Regardless of how much you might currently make or how trustworthy you might seem, landlords want to know that you’re going to pay your rent and not break your lease, and your credit score is a perfect way to determine that.
To be quite frank, many landlords will show preferential treatment to applicants with higher credit scores. You might apply for 10 different apartments, paying $35 for each credit check, only to be denied—which is an obvious waste of time and money.
So if your credit score is in the dumps, what can you do to bring it to an acceptable level as quickly as possible to increase your chances?
Glad you asked 🙂
1. Check your credit reports.
Pull your credit reports from AnnualCreditReport.com, which is a free service that allows you to look over your credit history once a year. Look for any delinquent credit accounts you might have accumulated during the last seven years. That medical bill for $55 from two years ago that you never got around to paying may very well be the reason your credit score is less than desirable.
Simple solution: pay it off as quickly as you can.
Also, any credit cards that went more than 30 days past due will show up on your report and bring your score down, so even if you accidentally miss a credit card payment by a few days, don’t just wait until the next month to make a payment—pay it ASAP. Late payments made within 30 days don’t typically make it onto credit reports, anything after 30 days will follow you around for seven years!
2. Monitor your credit score.
In RadPad’s article “How does my credit score affect renting?”, they mention a few resources that can provide you with free credit scores, namely Credit Karma, Credit Sesame and Quizzle. These companies provide what is commonly referred to as a “FAKO score,” a word play on “FICO score,” which is the most recognized and widely used credit-scoring company. Though FAKO scores may not be the ones that lenders or landlords use and may not exactly parallel your FICO credit score, it can give you a pretty realistic glimpse at where you’re score is in the credit spectrum. And since they’re free, there’s nothing to lose, so start monitoring your free scores monthly.
If you really want to know your FICO credit score and don’t want to shell out any money for it, you can jump through a couple of hoops.
Go sign up at myFICO.com and pay for the $14.95 monthly subscription, get your score, and cancel through their site within the amount of time specified and your card won’t be charged. Bam! Now you’re in the know.
3. Keep your credit usage under 30% of your total credit extension.
If you have a credit card with a $1,000 limit, and you keep it maxed out making only minimum payments, then it will reflect in your credit score. Try to keep it under $300 per month, or better yet, pay it off in full every month. If your card is almost maxed out and you can’t pay it off, then consider opening another credit card, but don’t use it much—if you get approved for another card for an additional $1,000, then your total credit usage will be around 50%. Not optimal, but still much better than 98%. Open a third card with the same credit limit and it’ll come pretty close to 30%.
If you always make at least a minimum payment on time, then don’t hesitate to call your credit card company once every six months to ask for an increased credit limit. You’d be surprised how willing they are to tempt you to go further into debt.
4. Don’t cancel your oldest credit cards!
This cannot be stressed enough. You may grow frustrated with your credit card company, but if you’ve had a card with them for a long period of time, closing it could bring down your credit score as it affects the overall history of your credit report.
If you follow these four steps, you’re likely to see your credit score improve month after month. Depending on where it was at when it started, it may take anywhere from a couple months to a few years to bring your score up to a level that won’t make creditors or landlords suspect you of being financially irresponsible.
If your score is well below average and you’re in a pinch to find a place, you might try being honest with landlords, showing them that you’re proactively getting your financial house in order and are becoming diligent with your credit profile. You never know, they might just cut you a break.