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By Maurie BackmanMotley Fool
Over past 3 years, average credit score increased by 1 point per year. You may need even stronger credit to rent a home these days.
You may have heard the higher your credit score, the more financial flexibility you’ll have. Having solid credit makes it more likely you’ll get approved for a new credit card, auto loan, or mortgage. And if you’re seeking to rent a home rather than buy one, strong credit could be your ticket to a lease.
In fact, the average credit score required to get an apartment is on the rise. Over the past three years, it’s increased by one point per year, reports RentCafe. And in a study of more than 5 million lease applications, the average credit score of U.S. renters was 638 in 2020.
Not surprisingly, renters in higher-end buildings tended to have better credit — an average score of 669. On the other hand, renters in low-end buildings had an average score of 597.
Either way, having good credit could spell the difference between getting your name on a lease or having to move back with your parents. Or couch-surf in the absence of a landlord who’s willing to take you on. And so, if yours isn’t where it needs to be, here are a few things you can do to boost your credit score.
1. Pay all incoming bills on time
Your payment history is the single most important factor that goes into your credit score calculation. It speaks to how well you pay your bills on time. If you want that number to increase, don’t be late with your bills — it’s that simple. For the most part, it also means paying all your bills in full, though there are exceptions. For example, let’s say you submit your minimum credit card payment each month by its due date. You’ll be counted as timely for credit score purposes, even if you carry the remainder of your balance forward.
2. Pay off some existing credit card debt
Paying off debt is easier said than done, but if you’re able to whittle down an existing credit card balance, it could really work wonders for your credit score. The less outstanding credit card debt you have, the lower your credit utilization ratio will be. That’s a measure that calculates your existing debt relative to your total available credit.
A ratio of 30% or below will help your credit score, so take a look at how much credit you have available and compare that to what you owe. Perhaps your total spending limit among all of your credit cards is $10,000 and you’re carrying a balance of $3,400. In that case, paying off $400 will knock your utilization ratio down into more favorable territory.
3. Check your credit report for errors
Sometimes, mistakes happen on credit reports. If there’s an error on one of yours that’s working against you, your credit score might rise if you get it fixed. It could be that one credit bureau has you flagged with a delinquent debt that you never racked up in the first place. Or, maybe your credit report still shows a debt you settled long ago. Request a copy of your report from each bureau — Experian, Equifax, and TransUnion — and see what’s up. You may have to get in contact with one or more bureaus to hash out errors, but it’ll be worth it when your score improves as those issues get resolved.
When it comes to renting a home, there’s really no such thing as a minimum credit score requirement. Each landlord will ultimately decide what credit score he or she is comfortable with. But the higher your credit score, the more likely you’ll be to get approved, so if that number needs a boost, get moving — before the time comes to sign a new lease.
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