You’ve heard the stories about a bad credit score, but how can you avoid ruining your own especially when applying to rent a new place?

Regardless if you are looking to set down roots in California or Florida, when you rent, landlords and/or property managers want to see your credit score to see if you can fulfill making your monthly rent.

What is a Credit Score?

What is a credit score? According to Equifax, considered one of the three largest American credit agencies: “A credit score is a rating used by a lender to help determine whether or not you qualify for a particular credit card, loan, or service. The credit reporting companies apply an in-depth mathematical model (called an ‘algorithm’) to the information in your credit file to yield your credit score. Most credit scores estimate the risk a company incurs by lending you money or providing you with a service specifically, the likelihood that you’ll fail to make payments in the next two to three years. The higher the score, the less risk you represent to the lender. Put simply, the higher the score, the better.”

If you don’t know what your credit score is, it may be a good idea to look before you start searching for an apartment or check it at least once year.

Equifax adds: “A credit scores usually range from 300-850, specifically those based on the standard FICO® Score. Occasionally you will see industry-specific credit scores which can range from 250-900. Regardless if you are looking at a base FICO®Score or an industry specific score, the same rule applies, higher is better. Equifax says there are five factors that determine your score:

  • 35% of your score is based on your payment history
  • 30% is based on current debts
  • 15% is determined by credit history
  • 10% is allotted to new credit applications
  • 10% is about types of current credit

Tips to Maintain a Good Score

Besides forgetting to pay monthly bills, there are a number of factors that can take you by surprise and destroy your credit without you even knowing it. To build or maintain a good credit rating you might find these tips helpful:

  1. Skipping payments or paying a credit card late can negatively impact a credit score. In fact, certain negatives may remain on your credit report up to 7 years or more. It’s important to pay your bills on time, every time to help improve your credit score.
  2. High balances – relative to the total credit limit – on several cards could indicate a greater risk of default and lower your score. Equifax says “this isn’t just impacted by how long you’ve had access to credit. It also takes trends in payment patterns and credit applications into account. While having a long history of good credit can boost your rating, missing payments or applying for new credit can dramatically decrease your score.”
  3. It’s also a good idea to have a mix of credit such as a mortgage, a car loan, and even a home equity loan, as well as one or two credit cards vs. having multiple credit cards. Try balancing between types of credit which may improve your credit score.
  4. Not using credit at all can also hurt your credit score believe it or not. In other words, you may ruin your credit without realizing it by not using it at all. What this means is if there is no credit history, there’s nothing to report you are a responsible user of credit who can manage balances and payments. Inactive accounts could default and even be closed over time which could lower your score. While it may not seem fair, for those hoping to rent an apartment should try to develop and maintain strong credit scores.
  5. With these tips, hopefully you should be able to make the most of your score. Remember, the higher the score, the better your chances of getting the credit you need to get and buy the things you want.