Renters are often at a disadvantage when it comes to improving their credit score. The two most common ways of raising your credit score are making on-time payments and having a long credit history, which can be difficult for renters. But, there is one way that renters can improve their credit score - rent reporting!
Rent reporting is the process of notifying lenders about rental payments each month so that they will show up on your report as an installment payment.
This blog post discusses how you can start renting today with confidence knowing that you'll have a better chance of improving your credit score!
Some people have never had a credit card, but they still pay their rent on time. But that doesn't show up on your credit report, and it won't help your credit score.Rent reporting services will report your rent to the credit bureaus. Some are free and others cost in excess of $100 annually, though you may not need to pay for it yourself if your landlord does.
Renters can help improve their credit score by using a rent-reporting service to increase the number of monthly payments on record. As a renter, you will also need to know which credit bureaus its payments are reported to in order for it to be effective, and which types of scores take those payments into account.
There will be times that those who rent a place may not have enough money in their pay cycle. If rent is due tomorrow and you don't have enough money in your account to cover it, you can also consider a rent loan to make sure you don't fall behind. This way your credit scores are not impacted. Your bank or credit union however may take days or weeks to approve your loan. There are other options out there that can get you cash faster than traditional banks. But these lenders typically require collateral and/or a credit check before approving you for a loan.
If you're looking for a fast-approval loan, one option that many people have turned to are rent payment loans! You can get approved with private lenders by completing an instant loan application that takes just minutes. You don't need any paperwork either; just fill out an easy application. You'll know exactly how much money you will be borrowing, what it will cost you and when it will be due back. There are no hidden fees and no surprises!
If you're renting now but want something more permanent someday down the line, consider using rent reporting when applying for a mortgage or loan.Renting is an excellent way for people who may not be able to maintain credit due to missed payments or lack of history, but using rent reporting will give you the opportunity start making improvements today!
How Rent Reporting Works:
Rent reporting is a process that captures monthly rental payments and reports them on your credit report each month as an installment payment. This is good for renters because it helps you to build up your credit over time since it's reported as an installment payment rather than just a purchase, which is the way most landlords report their renters these days.
It also doesn't involve any complicated paperwork - all you need is to set up the bank account and then talk to your landlord about drafting the check from that account each month, which should be easy to arrange if you've been paying on time and not causing any complaints with them.
You'll have to apply this method every time you move since landlords are likely not to draft from a previous account. That's why it's important for renters to keep their receipts - they're an easy way to show proof of rental payments if your landlord wont agree to do this!
What You Need:
You'll need a bank account that your rent payments are automatically drafted from. This way, you don't have to worry about forgetting to write a check or paying cash at the end of each month!
You'll also need an online banking account and enough money in it for two months worth of rent plus security deposit (for example $800 + $1,000 = $1,800). Once this is set up, contact your landlord and ask them if they will agree to draft monthly rental payments directly from your checking account so there won't be any issues with timely payment processing. If not, then make sure you're always on top of making these payments well before their due date. And lastly - keep receipts!
It is important to know that rent reporting may not be the best way for you to build your credit. Listed below are some of the other ways that people with bad or no credit can build their credit scores in a much more affective way.
Here's a list of 6 other things you can do to improve your credit scores:
1. Pay off revolving debt on time: Revolving debt can be found in credit cards, lines of credits and even student loans. As the balance gets higher, it becomes increasingly difficult to pay off that debt because of fees and interest. This is what leads people towards bankruptcy in most cases.
It's important that if your situation changes dramatically, to let your lender know so they can put a plan in place to help you pay your debt with manageable repayment terms.
2. Use different lines of credit: If you have only one type of credit, such as a credit card for instance, your score will decrease. It is best to have a mix of types of credit products with different balances and lengths of time in order to maintain higher credit scores.
A variety of credit products may help improve your credit score. But be sure to only borrow what you are capable of repaying. Otherwise, borrowing more money may impact your credit score.
3. Get a secured credit card and make timely payments: Secured credit cards are offered by most banks and function like a regular card, but they require a cash security deposit. It's important to keep your account in good standing.
These types of cards are perfect for people with bad credit scores or no established credit history, as well as those who want to rebuild their credit rating. It's important not to get too attached to this type of card if you are planning on applying for a regular unsecured account in the near future; some banks might raise your APR once they see that you've been using secured cards more than other types of accounts.
4. Don't apply for too many new credit accounts within a short period of time: While it's common to apply for credit occasionally. When financing companies access your credit history with a credit bureau, it's recorded as an inquiry. Inquiries are also known as credit checks.
If you have too many inquiries on your credit report, lenders may be reluctant to lend you money. This is due to the fact that they might think it's evidence that you are desperate for loans or trying to live beyond what you can afford.
5. Credit is a way to get things. You need to know how to use it well: If you have a credit card with $1,000 limit, try to keep your balance under that. Exceeding the authorized limit could lower your credit score by making it appear as if you are borrowing more than what is approved.
Your credit score is determined by two factors: how much of your available debt you use, and the percentage of your available credit to total debt. When you use a large portion of your available credit, lenders see you as a greater risk. Always keep your spending to less than 35% of what is available to you in credit.
6. Don't close an unused credit card account: Closing a line of credit can hurt your credit score because of the increased utilization rate. Keeping your credit account open for as long as possible is beneficial to your score.
Consider keeping an older account open even if you don't need it. Use it from time to time to keep it active. Make sure there is no fee if the account is open but you don't use it. Check your credit agreement to find out if there is a fee.
Renters: Pro Tips for Improving Credit Score
Rent payment history does not affect your credit unless you report it. If you pay rent but do not report to the creditor, then they will be unaware of this and under no obligation to update your account. But if you choose to track and report your rental payments on a timely basis then creditors may view that as a positive payment history and your credit score will improve.
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