Your credit score is always a part of your life whether you pay attention to it or not. So, it’s extremely important to make it a top priority when it comes to your financial health. With a poor credit score, you will find yourself unable to accomplish the things that you want to without paying huge penalties. This includes things like getting credit cards, home loans, car loans or even renting an apartment, among others. If they have already taken abuse, you can rest assured there are ways to raise your credit scores. But, first you should understand how they work.
Understanding How It Works in Order to Raise Your Credit Score
Your credit scores are calculated using by looking at a combination of different types of histories, account types, payments and inquiries. For example, your actual use of credit only accounts for 30% of your score, while the history of your payments is 35%. In addition, how long you have had credit accounts for 15% in this model, account types make up 10% and inquiries on your credit account for only 10%. This means that even if you have a lot of debt to handle, you can significantly improve things for yourself by making your payments on time.
Paying Your Rent on Time Can Raise Your Credit Score
There are certain things that you would usually see on a credit report and rent was not one of them until recently. Below is a list of what has traditionally been mentioned in your report.
- Debt from credit cards
- Educational loans
- House payments
- Loans on installments
- Liens from taxes
- Debts held by collectors
- Utility bills and phone bills that are unpaid
Many property owners and managers are now being encouraged to report rent payments to the different credit reporting agencies in a bid to increase the scores for sub -prime consumers. Bureaus like Transunion and Experian are making this even easier for them to report by setting up special services to report payment histories of renters. In this manner your property manager can send in information each month on the timeliness and amount paid, in addition to any extra owed. In order to make it an even bigger draw, Transunion in specific does not charge for this service. And, if requested, they will share this information with other national reporting companies.
Experts have supported this decision by adding some great data to show that this certainly a credit improving strategy for consumers. One such expert found that 79 % of consumers found an increase in their previously reported scores within just one month of renting a new apartment. This is a huge opportunity if you are looking to raise your credit score. It is worth your time to find out if your management company or landlord reports to the national agencies. If they don’t, simply ask them to! Don’t miss out on such a small way to make giant difference to your credit score.
Some Other Ways to Raise Your Credit Score
Rental agencies and landlords aren’t your only opportunity to start exploring. There are other providers that may not currently report your payments that can. You should always ask if they do report to the credit agencies and if they don’t, you might be able to convince them to. It is also very important to remember that even the service provider in question does not report accounts in good standing, your history may be reported if you don’t pay or if you pay them late.
So, besides paying on time, what else can you do to raise your credit score?
- You can set your payments up with automatic withdrawals on a twice a month schedule. In addition to reducing your debt in a swifter manner, this will also keep you from ever missing any of your payments or paying late on anything. It also allows you to reap the reward of lowering your credit utilization on a daily basis.
- Keep a watchful eye on your credit report. You can check it for no cost at annualcreditreport.com. If you find any errors, you must dispute them for them to be removed. It’s a necessity for you to protect your report from erroneous negative marks because no one else is going to check it for you.
- Work on increasing your credit limits, however, just because they give you more doesn’t mean you should use it. This will lower your credit utilization and bring your score up.
Always remember that it is your credit score and you are the one that has to make the decision to take control of it. The ways that you pay your bills have a direct effect on you reported score, so make sure you are following the steps set for here, and you will have it improved in no time!