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A Credit Repair Guide for Renters

by | Aug 24, 2022 | Credit, Renters

Credit Repair Guide for Renters

There are many ways that having bad credit can impact your life, but the ability to rent a property is one of the biggest ways. Not to worry, however, there are ways to reverse the situation you may find yourself in and begin your journey back towards having good credit.

Credit Repair Guide for Renters

Understanding why it matters and the process through which you can repair your credit is vital, even if some of the steps below may not apply to your current situation. You can click here to get your credit score right now. Then, be sure to use this credit repair guide for renters just like you to get ahead and change your financial situation forever. Let’s get started.

Why Do Landlords Use Credit Scores?

Companies or individuals offering properties for rent use credit scores to determine how likely you will be to pay what you owe them each month. The higher your credit score, the more it shows landlords that you have established responsible credit behavior. This gives them more confidence when evaluating your application. 

The lower your credit score is, however, the riskier they may view the prospect of entering into an agreement with you.

Sometimes, past landlord issues and collections claims on your credit report can make it difficult to secure a new rental application. And though your options may be limited, this situation can be overcome. Here are some tips that may help you rent despite bad credit:

  • Be Proactive: Explain the past rental and collection issues. Try to speak directly to the person making the credit decisions for the property and be honest with them about your situation. You might even consider writing a letter that includes the details and include that with your application.
  • Rent From a Local Homeowner: They may not even run your credit in order to approve you. Again, meet them in person when you view the property if you can and be up-front with them.
  • Rent a Duplex With an Onsite Owner: For the same reasons listed above, you have the benefit of explaining face-to-face with your potential neighbor.
  • Paying a Bigger Deposit: Paying more than is being requested for the property you are looking to rent may not be easy to do, but it could be enough to assuage any hesitation the landlord may be wrestling with.
  • Check Your Credit Report: If there are discrepancies, you may be able to explain those and show that you have appealed to have them removed.

Whenever possible, don’t simply leave your applications with someone at the front desk or submit them online. Go in person and ask to speak to the owner or the property manager. Dress nicely, maintain eye contact, and sell them on being a good choice as a tenant

In the meantime, even as you are searching for a property to rent, keep working on repairing your credit. As you build your score back to a healthier standing, these issues will become fewer and further between.

So What is Credit Repair?

In the most basic terms, credit repair is any means by which a consumer seeks to improve their credit score. Some items reflecting poorly on your credit score may simply be errors. There have been studies that have found one in three people to have at least one error on their credit reports.

Every consumer is entitled to an accurate, fair, and fully substantiated credit report under the Fair Credit Reporting Act. Doing so could be the first crucial step to take in repairing your credit. Disputing your report with the credit bureaus is completely free. So it is possible to repair your own credit, but many people either do not have the time or don’t understand how to make their case.

In these instances, it may be better to hire a credit repair professional to handle your particular dispute process. They have been through the motions before and likely know what to look for and how better to file any potential disputes.

Unfortunately, there are many scammers in this industry, so make sure to thoroughly research any company you are thinking of hiring. Avoid anyone who says that they can remove verified and accurate information from your credit report, and only work with a legitimate credit repair company. 

Taking Steps to Repair Your Own Credit

Figure Out Your Current Standing 

Before you can fix your credit, you need to figure out what has negatively impacted your score to begin with. Your financial data is typically collected by the three big credit reporting agencies – Equifax®, Experian™, and TransUnion®. That data is then taken by a credit scoring company and has an algorithm applied to it to generate your credit score. The two biggest companies used for this are FICO® and VantageScore®.

While many different things factor into determining this score, the items listed below are in order of “most damaging” to “least damaging”:

  • Bankruptcy
  • Foreclosure
  • Repossession
  • Loan default
  • Court judgments
  • Collections
  • Past due payments
  • Late payments
  • Credit rejections
  • Credit inquiries

You need to look at this information with an open and honest point of view. You might have missed payments. It happens. But in order to move forward and repair your credit score, you will need to own up to your financial history in whatever condition it is in.

Dispute Inaccurate Information

If there are any false claims or inaccurate information that you discover on your credit report, you are well within your rights to dispute them. When a dispute is filed, the credit bureau must perform an investigation. If the information is found to be incorrect, then they must remove the item from your credit report. In some cases, it could make a big change to your credit score.

Make a comprehensive list of all the inaccurate information present on the credit report separately for each of the bureaus (not all of them may contain the same entries). For each credit bureau that you find false claims with you should send a 609 Dispute Letter with a return receipt request and ask for the information you think is wrong to be verified. Be aware that it could take four weeks or more to process your dispute.

If you find accounts on your credit report that you do not recognize, consider reporting them to the Federal Trade Commission, as it could be an indication of identity theft. If fraud protection is something that you are concerned about, there are credit monitoring services offered by many credit card issuers. You could also consider locking or freezing your credit, which would prevent anyone from borrowing against your credit score.

Throughout this process, you should document your credit repair efforts. Stay organized and keep all mailing receipts and copies of correspondence that you have had with the bureaus. Document every telephone conversation you have with a creditor or credit reporting agency – write down the name of the person that you spoke to, their position, their extension, the date and time, what was said, and what was agreed upon. If the disputation period takes longer than the 30 to 45 days that is specified by law, you may have to prove it. Having strict documentation will help in these kinds of cases.

Pay on Outstanding Debts

While this step can be one of the most daunting tasks, it is also one of the most important parts of your credit repair journey. It may take months or even years, but once you work down the debt that you owe, you can begin to lay a new foundation for the future of your finances. The amount of debt you carry accounts for nearly a third of your credit score as reported by FICO®.

Debt consolidation can be a great way to manage and pay off a bundle of debts simultaneously. This option places all of your bills into a single loan that carries a single payment. Carefully consider the interest rate of whatever new agreement you enter into. You should also keep any credit cards you have open and unconsolidated – the age of your credit card accounts can also help your credit immensely. If spending on the cards is problematic, consider hiding or shredding the physical card themselves and only using them in an absolute emergency.

Implement Responsible Financial Habits

Learn from any past mistakes that may have placed your credit in jeopardy. Practicing good financial habits will help you make certain that you do not wind up in the same predicament down the road.

  • Make payments on time: This has the largest impact on your credit score and needs to be priority number one.
  • Keep credit card balances low: You want to keep your credit utilization (the amount of credit you have used when compared to your limit) ratio below 30%. Pay down all or most of any big charges within a month of purchase.
  • Do not borrow more than you can pay: Avoid borrowing more than you can reasonably pay back on time. Pay off your balances in full every month.

Begin Building New Credit

Once you have your credit score in a more manageable state, you are ready to start rebuilding a better foundation for your future. It will take time for your efforts to pay off, but have faith in your hard work and diligence. Allow time for your new accounts and strategies to show up on your credit reports. Be patient and continue to practice the responsible financial habits that you have developed over your journey.

If you decide that you could like help repairing your credit, be sure to click here to see what our affiliates can do for you.

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