Tag Archives: Credit Report

Becoming A Renter In Spite Of Bad Credit

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Many consumers rightly assume that their credit report or credit score will be reviewed before they are granted an automobile loan, mortgage loan, or other credit request that will result in outright ownership of some type of physical property. What may be surprising for many people is how their credit score may affect their qualifications as a renter of a house or an apartment. Although there are always exceptions and other unique circumstances, a low credit score is often viewed negatively in terms of risk for the lender and the likelihood of defaulting on the potential legal agreement. If you have ever broken a lease in the past, you may already know just how damaging this may be to your credit rating. The good news is that even with bad credit, there are ways to make up for a low credit score and ultimately become a renter.

One of the best things you can do if you are hoping to become a renter is to be proactive and obtain a copy of your credit report before you submit a rental application. You may request one free credit report each year in many instances, and what you find listed on your particular profile will likely indicate why your credit score is low. Even incorrect or erroneous addresses that are attached to your credit file may be lowering your score, as well as things like having accounts listed incorrectly or inaccurately. You may have even paid off old debts that are still listed as owing, and you may have accounts that are closed that show as being active. Any of these issues may be disputed, and making sure that your file is accurate and up to date with all of the major credit bureaus may result in a relatively quick and noteworthy improvement in your credit score.

Even if you do not have time to wait for corrections to be made and applied to your credit report, there are things you can do to effectively become a renter. You may submit letters of explanation regarding any negative information attached to your credit file, which may explain your previous financial circumstances. This may put you in better standing with potential landlords, and offering to put down a deposit that is larger than requested may be helpful as well. If you are willing to put more money up front, your landlord may likewise be willing to assume more of a risk and rent to you.

In addition to making a larger security or other type of opening deposit, you may offer to pay more rent each month for the duration of your lease. If this is not agreeable, finding and adding a co-signer for your rental agreement may be a workable solution. In some instances, offering to enter an arrangement whereby you do work on the property or complex in question may be enough to persuade a landlord to view you as a favorable future tenant. Providing a list of verifiable references who may attest to your credibility may be helpful as well.  Letting a landlord know that you are willing to provide as much helpful information as possible may go a long way in increasing your odds of successfully becoming a renter.

7 Persistent Credit Report Myths

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There are myriad myths and misconceptions about a gamut of different topics, but few are as persistent as these 7 credit report myths that live on to this day. Worse still is that the whole subject is technical, which makes these persistent myths about it all the more impressive and annoying at the same time – they just will not go away.

Perhaps what keeps them alive is that most of them are preconceived misconceptions. They are mistaken assumptions that can easily be made by anyone, regardless of how long they have been around. Do you still believe in some of these credit score myths and misconceptions?

Myth#1 – Checking Your Credit Report & Score Can Lower Your Score

To become financially savvy and in control, you need accurate data from reliable sources. Checking your credit report and score is a recommended way to do just that; personal inquiries into your credit standing – these are called “soft inquiries” – do not reflect on the credit report and do not impact your credit score. In fact it is highly recommended that you keep a close watch on your score if it goes south, so you can monitor the progress of your finances and assert control based on what you observe. You can obtain a free credit report once an year and this will not damage your score in any way. It is your right to examine them.

Myth#2 – There are Quick Fixes that You Can Use for Bad Credit

Just as a bad or ailing credit score is the result of a long period of shabby financial handling for one reason or other, you cannot use a ‘quick fix’ to just miraculously get rid of it. Money matters are serious issues and no sleight of hand can relinquish your low credit score just like that. You have to work on your finances for a long time to get your credit score back up to par, and even then you might not be able to borrow the way you would if your record was spotless to begin with.

Myth#3 – Credit Repair Companies Can Fix Your Credit Score for You

This is a variant of the “quick fix” myth and is more of a misconception.  Credit repair companies do exist, and the reputable ones do a good job of helping you fix your credit score. That is what this misconception misses: the companies help YOU fix your credit score. They do NOT do it for you. They are advisors and counselors and financial abettors, no more, no less. For some people, they can easily learn how to fix their bad credit and do it on their own. For others, there are credit repair companies.

Myth#4 – You Have Only One Credit Score

There are three main credit monitoring and reporting bureaus that keep track of your credit score: Equifax, Transunion, and Experian (plus Innovis in the US).  If you only had one credit score, there would be no need for three bureaus. These three organizations have similar methods of calculating your credit score, but have differences that set one apart from another. One bank or creditor might get reports from one of these three while another bank or creditor gets reports from another, though usually they check records of all three to get a better picture of your financial status.

Myth#5 – You Do Not Have to Worry About Credit Scores If You Do Not Use Credit

You can live without credit, but can you live without renting your apartment, applying for insurance, or getting a job? Your credit score is a reflection of your financial capabilities and responsibility in handling an important aspect of your life. Anyone (landlord, insurance company, potential employer) who needs to understand how you handle your finances for “permissible purposes” can get a copy of your credit report (at times with your permission) and base transaction decisions on that.

Myth#6 – Your Good Credit Offsets Bad Credit

Bad credit history will not look good just because you are currently successfully handling your finances well. Banks and financial organizations that check your credit report do so to see how much of a risk you bring to a business transaction. If there is still existing bad credit history on your report, your good history will not offset it, though your current good standing will make a significant impact on the overall decision. It might not seem fair, but there are many reasons you might have gotten bad credit before such as economic situations beyond your control. These factors must also be considered as possible risks.

Myth#7 – Some Items Last Forever in Your Credit Report

Foreclosures and bankruptcies have a huge impact on your credit score, but they will not reflect on credit reports forever.  Such items can last in reports for as long as 7 to 10 years – which is a very long time for bad credit to affect your finances – but they will be shed off after that allotted time to reflect new financial transactions of import. Since your good credit does not offset bad credit, clearing up this misconception should be good news for you: that lien or bankruptcy from years away will eventually wash off, and you can work towards making your report a clean slate until then.

Obviously, it is quite simple to make the erroneous assumption that if you do not use credit your credit score will not matter that much or that you have only one credit score. It is even just a figment of fairness to assume that good credit offsets bad credit. What is important is going through the effort of clearing up what is credit report myth and correcting misconceptions. After all, you can get problems with your credit if you continue to believe in these credit score myths.

What Lenders Look For In Your Loan Application

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Lenders will carefully examine the financial standing of a person who is taking out a mortgage loan, student loan, refinance loan, car loan or some other large type of loan. There are numerous factors that a financial institution will consider before granting a loan application and setting an interest rate for the loan. One’s credit report is extremely important as a person’s credit score will determine if he or she can even qualify for a loan and if so, what the interest rate on the loan will be. However, there are also other factors that will be taken into consideration.

Credit Rating

Fortunately, one does not need a perfect credit rating in order to get a loan at a reasonable interest rate. However, one will need a history of having paid credit bills and other bills on time. A person who has been over 60 days late in paying his or her bills will have a hard time getting a low interest rate loan, as he or she will be perceived as a risk.

Prospective lenders also want to see how many other loans one has taken out and whether or not these have been paid back. In fact, some financial institutions advise people not to take out a home mortgage loan until car loans and student loans have been paid off. If you are already paying off a mortgage loan and one or more other loans, then pay the other loans off first before taking out an additional loan.

Many individuals also do not realize that free credit report checks can also leave a bad mark on their credit. If a person has authorized a lender, employer or some other business or individual to check his or her credit report, this will be noted by the credit agency. Lenders do not like to give low interest loans to individuals whose credit report has been checked numerous times in the recent past. This indicates that a person is either applying for a lot of credit or intending to borrow a lot of money. It is best for one to check his or her own credit report, whenever possible, as this is not noted by the credit agency.

Lenders will also consider how high or low one’s credit limit is. A person with a high credit limit will actually be considered risky by a bank, as the bank will be concerned about one’s ability to spend a large amount of money in a very short amount of time. Before applying for a loan, one will want to close unused credit accounts and/or reduce his or her credit limits. Be sure the credit company notes that this was done at the consumer’s request, as otherwise it can give the impression of having been penalized.

On the other hand, one will not want to eliminate all of his or her credit accounts. A person who has a credit card will want to be judicious and only buy what he or she can actually afford. However, one will want to use his or her credit card on a regular basis, as this will provide one with a record of having made credit purchases and paid them on time. Those who have no credit history often find it just as difficult to get a low interest rate loan as a person with a poor credit history.

Other Factors

While one’s credit score is extremely important, it is not the only factor that is taken into consideration. Banks and other financial institutions will also look for signs of stability or instability in a person’s life. A person who has been employed with the same company for at least a couple of years will have an easier time getting a low interest rate loan than a person who has recently found a job or who has just switched jobs. Living in the same house for an extended period of time is also a sign of stability.

Lenders will also consider what type of employment a person has. Those who are self employed are often seen as a bit of a risk. Self employed individuals often find it difficult to payday loans or large low interest loans. However, such individuals can get low interest rate loans if they are able to show substantial income for the last year or two. Lenders simply want to see that a person not only has stable income in the present but that he or she will also have stable income in the future.

A person who is taking out a mortgage loan will want to save up the money to make a large down payment. The ability to make a sizable down payment on such a loan shows the lender that one has the capability to earn and save money and is thus a responsible borrower. Even a person with less than stellar credit can get a loan at a reasonable rate if he or she can put down a large down payment.

In Summary

A person who is considering applying for loan should first of all consider if now is the right time or not. One’s credit report, job, financial situation and other factors will be considered and will determine if someone can get a loan or not and if so, at what interest rate. An individual should do everything possible to show that he or she is stable, responsible and doing well financially.

Credit Reports and Divorce

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No matter what your life circumstances, you should always have your own credit.  If you’re married, the relationship might end.  It can happen through divorce, whether friendly or unfriendly, or death.  If you don’t have your own credit history, life can be very difficult.

If you don’t have your own credit established and are considering divorce, get to your bank immediately.  This is the best place to start because you have some relationship with the bank even if you have never set foot in the building.  Take the opportunity to open accounts in your own name.  Open both a savings and checking account, and start saving every penny you can.  Your spouse can’t, legitimately, get any information about your account or even the fact it exists.

The next thing you need to do is apply for a credit card in your own name.  Your bank should offer one, and that is probably the best place to start establishing your own credit.  One you have taken care of these two issues, talk to your bank’s financial adviser and get any advice you can.

One thing you need to do is get copies of all your credit reports.  If you don’t know what a credit report is, you need to learn.  There are 3 credit bureaus:  Equifax, Experian, and TransUnion.  Each creates its own credit score, and one bad score can cause problems.  Each has its own way of presenting the information and calculating your credit score. You can obtain a free credit report from them once an year.

If you have already begun the divorce process, or the divorce is final, the problems can be more difficult.  You probably need to consider signing up with a company that lets you look at all three of your credit reports as often as you need to.  You need to keep up with all joint accounts until they are at a zero balance at which time you can remove your name from the account.

If your spouse has been ordered to pay on the accounts, keep a close eye on the status of each one by checking your credit files often.  In the event your spouse is cooperative, simply remove your name from any accounts you can, so the debt no longer appears on your credit report.

It will take some time to separate your credit life from that of your spouse’s.  Take the time to contact each credit reporting agency, and request that a consumer statement be put on the account that explains the fact there has been a divorce, and your spouse has been ordered by the court to pay the debt or debts if that is the case.

If you have debts that are your responsibility, do your best to take care of them.  You may cause your spouse harm by destroying his or her credit, but yours is going to suffer, as well.  It’s really not worth it.  A good credit score will serve you better than sticking it to your spouse.

It takes time but, in the end, if you persevere and do everything you need to do, your credit report will recover, and you will have your life back.