A credit score is used by companies to learn your level of creditworthiness. According to Oxford Languages creditworthiness is defined as the extent to which a person or company is considered suitable to receive financial credit, often based on their reliability in paying money back in the past.
Credit scores range from 300 to 800, with 800 being the highest and 300 the lowest. A score of 700 or higher is considered good, while a score of 650 to 699 is considered fair. A credit score below 650 is considered poor.
Why Is My Credit Score Low?
There are many reasons why you might have a low credit score. Maybe you’ve missed a few payments, had some collections, or applied for too much credit in a short period of time. Whatever the reason may be, there are steps you can take to improve your credit score.
You should obtain a copy of your credit report from all three credit reporting agencies: Experian, Equifax and TransUnion. You are entitled to one free report from each agency every 12 months. Go through each report carefully and look for any errors. If you find any, file a dispute with the credit bureau.
Next, make sure you’re current on all your bills and that there are no delinquent accounts. If you have any unpaid collections, try to negotiate with the creditor to have them removed from your report.
When is A Credit Check Done?
There are many things in life that when you apply, the company will want to do a credit check. This usually occurs if you want to apply for:
- Car loan
- Credit card
- Mortgage Utility services like water, gas, or electricity
- Cellphone plan
This also includes when you are looking to rent a property.
When a person applies to become a tenant for a rental property, the owner or property management company will usually perform a background check and also a credit check (with the tenant’s consent). Credit checks are done to see if you have a history of paying your bills on time.
If your rental application has been denied don’t simply give up. It is important to start working on improving your credit score.
How Can I Improve My Credit Score?
Some things you can do to improve your credit score and get approved for a tenant application include:
Make sure to pay all of your bills on time from now on
Limit the amount of credit you use. It’s best to keep your balances low, around 30% or less of the credit limit
Don’t open any new lines of credit that you don’t need. Opening too many new lines of credit can lower your score
If you have no credit history, consider getting a secured credit card and using it responsibly. This will help you build up your credit
By following these tips, you can improve your credit score and get approved for a tenant application. Improving your credit score takes time and effort, but it is possible. Be patient and consistent in your efforts to improve your credit, and soon you will see results.
If you are an investment property owner and would like help managing your investment properties and screening tenants, we would be happy to assist! Call Reed Property Management.