CREDIT

Сredit is the ability of a customer to obtain goods or services before payment, based on the trust that payment will be made in the future. i.e. “I’ve got unlimited credit”

In the simplest terms, whenever you borrow money from a bank or open a new credit card, store card or sign a lease you are creating a line of ‘Credit’ with that company. They are going to give you money or goods or a place to live based on your promise to pay for it in time. They will likely give you a minimum monthly payment, or in the case of a lease you have rent. Making that payment in full on time is very important to your ‘Credit Score’.

CREDIT SCORE

Your ‘Credit Score’ is a score that shows other companies how well you have managed the credit that you have been given. And yes, it very often factors into getting a lease agreement.

Currently, in the United States, three companies create these credit scores -Equifax, TransUnion, and Experian. They track things like payment history, how much of your available credit you are using, and the length of your credit history.

For example, if American Express gave you a limit of $3000, and you have a balance of $1500, then you have used 50% of the credit available to you.

If you make your payments on time, use only a small percentage of the credit available to you, and maintain that credit for many years, your credit score will be higher. Higher is better.

FICO SCORE

Your ‘FICO Score’ is a combination of the scores provided by Equifax, TransUnion, and Experian. A high score indicates a low credit risk. People with a high FICO Score have an easier time getting credit, they often get lower interest rates and are extended more credit.

How Does This Affect Your Ability To Rent?

Landlords are creditors too.

They are ‘lending’ you their property with the promise that you will pay them monthly in the form of a lease contract. To determine ahead of time if you will be able to do this, they look at your credit, which to them indicates if you have made purchase decisions in the past that you have been able to pay off.

Stay ahead of your credit by…

• Always pay your rent first and on time. Even if your credit is lower for other debts, it is better than owing another landlord in the eyes of a potential new landlord. Paying rent late can come with a whole host of issues, like incurring additional fees and getting dinged on your credit history.
• Live within your means whenever possible. Those lattes are delicious, but you can make them at home if they keep you from having the home you want 😉
• If you do get behind on your credit payments, don’t hide from it. Contact the creditor and see what you can work out, you may have options you don’t know about to get right without being sent to collections. Also, depending on the apartment, showing you have a stable and sufficient income source goes a long way in overcoming credit-related concerns.