What’s on your credit report? Do you know?
Most people do not pay attention to their credit until they need it and then, unfortunately, they don’t have any or they have negative accounts. Most people seem to be surprised when their credit is run and a low FICO score comes back. Some do not even know what a FICO score is. So let us start there what is a FICO score? FICO is an acronym that stands for the Fair Isaac Corporation, they are the creators of the FICO score. A FICO scores purpose is to help agencies determine your Creditworthiness, it allows them to evaluate your credit risk. There are Five areas that are considered to determine credit risk. They are as follows: 1. Payment history; 2. The current level of debt/amount owed; 3. Types of credit used; 4. length of credit history and 5. New credit (inquiries).
The combination of those five areas gives a number. This number can range anywhere between 300 to 850. The higher the number the less risky you are considered. Landlords and Property managers pay attention to these numbers. They want to know you pay your bills, that you will pay your rent. Other relevant information that is available on your credit report with regards to renting a property is Criminal and Eviction history, which can be pulled from hundreds of national, state and county courthouses across the United States. Recently Credit Bureaus have started allowing Landlords and Property Managers the ability to report Rental payment history. This encourages on-time rent payments while also offering a positive incentive to build tenant’s credit history.
Screening, Screening and more screening is necessary when looking for a tenant for property owners and property managers. Unfortunately for some, it comes down to the number, which is why it is important to pay attention to what’s affecting that number and catching items that may negatively impact you. If you don’t have any established credit start with something simple by a small item from a jewelry store, make payments for 6 months and then pay it off. Wait a couple months and do it again. Keeping it manageable keeps it positive. Remember the goal is to build good credit not create debt!
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