Your credit score can impact your life in so many ways, and you might be surprised at what can affect it.
Whether you are looking to rent an apartment, buying a car or even applying for a job, your credit history can affect your success. Although in theory, your credit score gives future landlords a way to predict future behaviors, there are many things that go into your credit score that are pretty surprising. Here is a list of some of the most surprising things that can affect your credit score:
#1. Late Rent Payments
In most cases, your rental history won’t be a part of your credit score, but if you’ve habitually missed rent payments or made rent payments late, your landlord can report it to the credit bureaus for a fee. While these late or missed payments won’t sink your score, having them in your credit report could make it difficult to rent in the future, and they can plague your credit report for up to seven years.
#2. A High Debt Utilization Ratio
Believe it or not, using the full amount of credit you are given can actually hurt your credit score. Your debt utilization ratio is essentially the amount of credit you have used versus how much credit you have available. For example, if all of your credit cards are maxed out, then you have a high debt utilization ratio, which can cause your credit score to take a hit. According to the experts, you should limit your balances to below 30 percent of your available credit. This is true for individual cards and lines of credit, as well as your combined credit.
#3. Closing Accounts
How long you’ve had accounts and credit cards open makes up for a whopping 15 percent of your credit score. If you have old credits cards or accounts that you haven’t used in years, you may be tempted to close them, but this can hurt your credit score. Regardless of whether you use them or not, you should keep your old accounts open.
#4. Debt Settlement
If you’re carrying a lot of debt, it can hurt your credit score, but the frustrating part is that debt settlement can also hurt your credit score. This is because debt settlement is seen on your credit score as paying less than what was owed or making a partial payment. Unfortunately, this is the case even if you go to a credit counselor to settle your debts, but keep in mind that this can make a huge difference in your monthly budget, so don’t avoid it just to save your credit score from taking a hit.
#5. Unpaid Library Fines
While a two dollar library fine may not seem like a big deal, if you don’t pay it, it can come back to haunt you. Libraries are infamous for sending those unpaid fines to collection agencies, and collection agencies will typically report balances to the three main credit bureaus, which can hurt your credit score.
#6. Business Credit Cards
Do you have a business credit card that you use for work-related expenses? If so, it’s important to find out if the card has a personal guarantee. Most card companies require companies to provide personal guarantees on all business cards, which essentially makes you a cosigner on the card. If you fall behind on the paperwork for the card or your company defaults on the card, you could be held liable.
As you can see, there are so many things that can affect your credit score, and not all of them are obvious. But luckily, with Ways 2 Rent on your side, your credit score does not have to prevent you from finding the perfect home. Contact us today to learn more about our second chance rentals, and be sure to stay tuned for our next blog to learn about a few more things that can affect your credit score.