One of the most common questions MyFirstApartment has received has been about credit scores — how high do scores need to be and how can you get a higher score?
As you may or may not know, there are three online sites that required by law to give you a free credit report once a year. They are: equifax, transunion, and experian. The first step to understanding where you stand, is to request a free credit report from ONE of these places and proofread it, ensuring that all of their information about you is correct; the reason I emphasize that you look at only one at a time is that you want to make sure that you can re-check with another one in a few months, if need be, and not have to pay a fee.
Reading through your credit report, you’ll see all the lines of credit you’ve ever had in addition to your past addresses etc; if anything is incorrect, especially regarding your payment history, be sure to do all you can to correct it. I had a dispute with Marshal Fields(before it become Macy’s), it’s still unresolved and thus it appears I was late with a payment — therein lowering my score.
What about your actual credit score?
Well, finding your actual credit score is bit harder to look at for free — but I did find you a way. It involves signing up for a 30-day trial of MyFICO, an online site that tracks your credit and will share your number with you. At MyFico, you’ll find out your exact score in addition to how it was computed; I was happy to find mine in the high 700’s even with my Fields dispute:)
As for how it was computed and how you can raise your score — your score is based on how long you’ve had credit, whether or not you’ve defaulted on your credit, public records, and whether or not people are often inquiring into your credit. So, basically, there’s no quick fix to raise your credit if your report is accurate. For a more detailed explanation, check out My First Apartment’s earlier post “First Things First.” If you do better with video, the folks at Video Credit Score are ready to help you out. How Stuff Works also has an easy to understand article explaining the history of FICO.
So, what’s FICO stand for? None other than Fair Isaac Company, the company that created–and computes–this credit score. Other companies also compute the score, but FICO is by and large the most trusted.
Lastly, what score do you need now to score a sweet apartment? Well, think of it kinda like eBay. You’re bidding against others — and the buyer has to pick SOMEONE. If possible, try to get a minimum score of 650, ultimately shooting for over 700. But, good credit scores take time to build; one qualification is how long you’ve actually had credit. Which. . .sucks. I actually lost a place once because my new roomie and I didn’t have as good credit as the married couple also looking at the 2 bedroom and I was SUPER mad. But, there are things you can do to combat this prejudice.
1) Offer to have a guarantor — likely an older adult such as a parent or longtime friend/boss who can financially vouch for you.
2) Offer to pay a larger security deposit.
3) Last.. .and perhaps most painful . . .offer to pay it all upfront.
Try to avoid #3, but it may come down to that if you have absolutely horrendous credit. As for how the recession effects credit scores and what kind of number you’ll need to win the apt, more and more people are going to have worse credit — but there are still plenty of people who have remained stable. So, while this is a good time to rent — if you’re worried about credit I’d stay away from large management companies who screen everyone and try to rent directly from the owner who will just be grateful to have a tenant.
Hope this helps!