Need to Rebuild Your Credit? Tips To Help You Get Approved!
Updated: Mar 8, 2022
Our Simple Tips Can Help You Get Approved for Your Next Apartment
If I Have Bad Credit Can I Be Approved for an Apartment?
Thinking of renting an apartment but bad credit or no credit getting in the way of your approval? Let’s take a closer look at the simple ways you can improve your credit score and rent the apartment you want!
What is Bad Credit?
A FICO score of between 300 to 580 is considered a bad or a poor credit rating. If we look at the following table, we get an idea of where credit scores fall and what the numbers mean:
Credit Rating Scale
300 - 579 Poor
580 - 669 Fair
670 - 779 Good
780 – 850 Excellent
While the table offers a general idea of credit ratings, if you have a high credit score, you have a better chance of receiving approval for various financial applications.
Good credit is the single aspect of financial health that landlords and property managers consider when examining your lease application. For single renters, a sound credit history makes it easier to receive approval for a lease because it shows the landlord that you are financially responsible and can afford your monthly payments.
If you don’t have a good or even a fair credit score, there is no need to panic. There are steps you can take to build and improve your credit rating.
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How is My Credit Score Calculated?
A credit score is based on your financial history and spending habits. It is largely influenced by the following factors:
Whether your bills have been paid on time and the number of late payments associated with your accounts.
The amount of credit you have and actively use.
The different forms of credit you have qualified for.
The period of personal credit history.
When you assess your credit report, always look for inaccuracies. Remember, not to make any hard inquiries into your credit history as this could also influence your credit rating.
What are the Implications of Bad Credit?
Bad credit makes it harder to obtain approval for financial interests such as a personal loan or mortgage. Let’s take a closer look at the implications of a bad credit score:
Difficulty Obtaining Loan Approval
Whether a loan to buy a house or a car, a low credit score makes it increasingly difficult to receive financial approval.
Higher Interest
A poor credit score can also hike interest rates and insurance premiums. It could make employment difficult and compromise your ability to attain your goals.
Fortunately, there are ways to build your credit and you can start making these changes today.
Steps to Rebuilding Your Credit Score
If your goal is to rent an apartment or to eventually buy a home, working on your credit is a great way to improve your financial status and curb the limitations of bad credit.
Examine Your Credit Rating
To improve your score, you need to know what your rating is. By obtaining a report, you can also see which aspects of your credit are affected and which areas you need to focus on. Question any payment, credit, or general financial statuses that are not accurate.
Reduce Your Debt
If you have outstanding debt, focus on making payments toward the balance. If you cannot manage your current debt, you have the option to negotiate monthly repayments. If you cannot negotiate a monthly installment, having a financial advisor represent your interests will help you with affordable repayment plans.
Reducing your debt can help you improve your credit score.
Paying Bills
One of the biggest reasons for a tarnished credit rating is a failure to pay your bills on time. Whether a credit card, a clothing account, or a mobile contract, late payments will negatively affect your financial history.
Find Ways to Improve Credit
While this may seem counterintuitive, taking on a small credit card or a small loan and repaying it on time, is a simple way to build credit. If you cannot get approval for these or fear you will miss the monthly payment, then consider help from a co-signer.
Co-signers should be someone with good credit who is willing to act on your behalf. This means that should you wish to take out a line of credit or a loan, the co-signer will issue surety. If you cannot pay the bill on time, it becomes the financial responsibility of the co-signer to settle the fees.
Fortunately, with some financial planning and seeking the assistance of a financial advisor, you can have a payment plan that will help you rebuild your credit. Remember, credit scores do not increase overnight. It is a process that requires some work, discipline, and some time. By sticking to your plan, you will reap the rewards, and this includes successful applications for an apartment.
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How Long Will It Take to Rebuild My Credit?
If you are building your credit from the ground up, it can take up to 6 months to establish a credit report and a rating.
For those who wish to increase a credit score from 400 to 500 points to 600 or 700 points, it could take up to 18 months.
The period for improving your credit largely depends on personal factors. Are you starting from zero credit? Do you have outstanding debts? What are you doing to manage these debts?
With frequent credit activity and maintaining a strict financial schedule, you can build your credit relatively quickly.
What Can I Use to Improve My Credit Score?
The tricky thing about fixing a credit score is to show responsible and active credit management. While your goal is certainly not to accumulate any more debt, you have to show an active line of credit that you are managing to increase your score.
One of the easiest ways to increase your credit rating is to use a phone bill. Experian states that building a good borrowing and repayment history is best achieved with a phone contract. These bills can be incorporated into a credit report and for this reason, it is a good way to work on active credit.
Because financial service providers want to see that you can pay your debts on time, an inexpensive phone contract (if you don’t have one) can help you make weekly or monthly payments and prove your timely settlement of debts.
If you have a phone contract, include it in your credit report and be sure to make your payments on time, or you could find your credit score dropping!
Why Does a Landlord Need My Credit Score?
A landlord requires your credit score to determine your financial history and affordability. If you have a low score, they may be under the impression that you have a significant amount of debt, that you cannot afford your debt and your rent, or that you will not be good at paying your rent on time.
Landlords want to select tenants that will bring in a steady income. This is why it becomes a lot more difficult to receive approval for an apartment with bad credit. But it is not the end of the road.
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If I Have No Credit Can I Still Rent an Apartment?
If you have no credit or low credit, you may still be able to qualify for an apartment. Have a look at our resource: Poor Credit and Application Approval. We provide a breakdown of the process involved in applying for an apartment with bad credit.
How Second Chance Apartments Can Assist with Credit Scores?
A second chance apartment is a fantastic way to work on your credit. While landlords and property managers may turn your apartment application down owing to a poor credit score, second chance apartments are all about that second chance in life!
If you have a good income, stable employment, and positive rental history, you may qualify for a second chance apartment. The good news about second chance apartments is that your application isn’t immediately rejected because of your credit rating, rental history, or background.
If you do receive approval for an apartment, pay your rent on time. This is another way to build your credit rating. Simply peak to your landlord about the rent, security deposit, and apartment levies. If you can comfortably afford the rent including your pressing expenses (insurance etc.), then you should manage the monthly rent.
How Quickly Can I Increase My Credit Score?
If you need to increase your credit score fast, there are a few steps you can take to work towards a higher rating.
Work on Paying Your Debt
Did you know that 30% of your credit score is dependent on your repayment of debts? Late payments from credit card balances to loans can have a detrimental impact on credit score. As part of working your debts off quickly, you can look at your income, expenses, and what you can afford to settle the bills. Do not stretch your finances so thin, however, that you cannot afford the utilities or groceries. Find a repayment solution you can afford.
Open an Account
Again, you might find it strange to open a new account despite outstanding debt or a low credit score. The purpose of opening an account is to help you practice active credit.
You see, when financial providers such as a bank look at your financial habits and calculate your credit, they want to see how you are using it. If you need to rebuild your credit, opening an account and making a small balance you can afford to repay each week or month will show them just how much you can afford and how you can improve your financial status.
Always exercise precaution when you take on additional credit. It is better to work on pressing debt to raise your credit score than opening another account. If you have no credit and your debts are settled, then a new line of credit can help you quickly boost your score.
Focus on Negotiating Repayments
If you are not paying a specific debt because you cannot afford the installments, it is best to contact the creditor and negotiate a repayment plan. Rather pay the debt in smaller amounts that you can afford than not at all. Not only does it reflect positively on your financial history, but it also supports faster credit building.
Pay Creditors More than Once a Month
A monthly payment to settle your debt is important but if you can increase the repayments, it can lower your debts faster. This means an improvement in credit. A payment at the end and mid-month can go a long way to helping improve ratings. Not only will it help you eliminate the debt but also places your efforts in a positive light with banks and similar credit providers. Only consider a twice monthly payment to address outstanding bills if you can afford it.
Consult with a Financial Advisor
One of the best ways to learn about your affordability and repayment plans is with the assistance of a financial advisor. Their role is to assess your income, expenses, and your credit with the purpose of developing a plan towards financial stability.
Increasing your credit is all about work and time. It requires some negotiation and is an important part of building a future.
Your Credit and Renting an Apartment
When your goal is to rent an apartment, a positive credit rating can certainly work in your favor. When you understand how to increase your credit, you can start taking important steps today to secure your tomorrow.
It is always important to consult with a financial expert. Your circumstances are unique, and you need a tailored financial plan to help you reach your goals. Second chance apartments can also help you to improve your chances of approval for an apartment to rent.
While working on credit can take time and sacrifice, it will present incredible financial opportunities and the knowledge to exercise sound financial management!
