The dorm days are over and you’re looking for your first apartment. But as you start pulling options for your new bedroom decor, you may also want to pull your credit history and make sure it’s in good shape.
With the click of a button, leasing agents can check your rental history, credit score, and even see if you have any large outstanding bills. With this information being so easily accessible, leasing companies have become picky about whom they let sign on the dotted line. Then, once you’ve passed the tenant check and are settled in your apartment, you’ll want to maintain your good credit history — which means paying your rent and making sure your utility bills are taken care of.
Here’s what you need to know about renting and your credit.
How do rental applications affect my credit?
When a rental company requests a credit report, this is often referred to as a “hard inquiry.” Too many hard inquiries can negatively affect your score. With this in mind, it’s important to limit your number of applications to the apartments at the very top of your list and apply to all within a two-week time span. Not all leasing agents pull a credit report, so you may want to ask what the screening process is. Or, offer to provide a copy of your credit report, since checking your own credit history will not effect your credit.
If landlords discover that you have little to no credit (which is common for college students), they will often request that you provide a co-signer or guarantor, typically your mom or dad. Leasing companies are often more lenient in college towns. Rather than declining your application outright, there is often an understanding that college students are often in the early stages of building credit. Enjoy this privilege while you can.
Now that the lease is signed, your credit, as well as your guarantor’s credit, is on the line.
How does rent affect credit?
On-time payments are crucial to your credit score. If rent goes unpaid and the balance is sent to a collections agency, your credit score may suffer. However, if you pay on-time, it could set you up for an easier rental process in the future. You’ll also have a landlord who can serve as a reference when you’re applying for leases to post-grad apartments.
If you have a guarantor on your lease, remember your actions can impact their credit. If you fail to pay your rent, your co-signer is legally responsible to settle the bill — that includes any late fees, interest, etc. Overall, any negative actions on your part will ultimately affect your co-signer as well.
What happens to my credit if utilities are late and under my name?
Generally, the payment history for utilities like your internet, cable, electric, and water don’t show up on your credit report. However, if utilities continue to go unpaid, you not only run the risk of your electricity being turned off, but companies will report you to small claims court and potentially a collection agency. The collection agency would then list the account on your credit report, which could lead to a score drop.
Remember that you are solely responsible for any bills under your name. Just because your roommate doesn’t pay her half on time doesn’t mean you should allow the bill to go unpaid — in the end it doesn’t affect her credit by a single point. And, though your credit may not be immediately impacted, your budget will: You can incur late fees. Avoid this entirely by setting up auto pay for your bills.
Renting an apartment can be tricky, but maintaining good credit is fairly simple —pay your bills and pay them on time. By getting in this habit during college, you’ll set yourself up for success when you’re out on your own.
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