The Ultimate Guide to Building Credit as a Renter: Steps You Can Take Today

What are credit scores, and why are they important? Most of us are aware that having good credit scores is important in order to participate in today’s economic marketplace. Yet, few know what credit scores are or their importance. Especially renters, as there are about 100 million Americans who’re renting at any time. One of the main components of credit scores is timely payments, and rent is the single biggest and most important payment one can make. It’s possible now that every rent payment renters make for rent every month can positively impact the credit scores directly. 

Although looking at some scenarios, many renters think that they are lacking behind or missing out on raising their credit score in comparison to homeowners. In this fast-paced world, building credit equals building your financial stability. Other main components of building traditional credit scores are having a credit card and owning a home (mortgage). As a homeowner, one can raise their score through mortgage payments. Whereas, looking at this, renters don’t acquire this opportunity in comparison to the homeowners. However, if you are a renter who is looking to build their credit, this is a complete guide for you that will teach you how you can build/raise your credit score. Keeping aside the mortgage payment benefit, renters also have access to tools that if used effectively, can raise creditworthiness. a lot of other effective solutions that can help raise and prolong their credit . In this article, you will find all necessary steps that can help you establish a good credit history while you keep making your monthly payments that eventually qualify you to own a house. keeping your rental status.

Steps you can take to build credit as a Renter

Building your credit needs a thorough research as it helps you make various things easier for you. So, if you are a renter and are seeking for some ways to do so, let’s discuss about the steps that can help you make your credit strong. 

Step 1: Understand why credit score is considered important

Before you get to know about some methods to elevate your credit score, it’s crucial to know why having a high credit score is important. To be precise about the credit scores, one must acknowledge that having high credit score improves the lending conditions, helps to get cheaper interest rates while buying a car or wanting a mortgage for your first house., and even improves the chance of getting a better apartment, better preference, including influencing a job hunt.being employed. It is a also a tool used by landlords, employers, and lenders to know. Understanding the importance of your credit score is the first step of shaping your financial journey

Step 2: Begin Making Sensible Credit Card Use

To build and maintain your credit score high, credit card acts as a great too. So, you must know how to responsibly use your card. So to use your credit card sensibly you can use these methods:

• Apply for a secured credit card: To initially start your credit journey you can simply apply for a secured card. Most banks and credit unions allows you to have a secure debit card that works like a credit card. Secure credit card is when you put down your own money (e.g. $100, $200, $300) but bank will treat like a credit card. So everytime you use, it’ll report to credit bureau..Using this kind of card makes you liable to do a cash deposit which will be your credit limit. This will ensure you to improve your credit score gradually as well as lower the lender’s risk.

• Make regular purchases: You can use your credit card for some day to day purchases like groceries, gas, etc as this will help you keep a relatively low credit utilization. Make sure to pay down at the end of the month and only use that you can afford to pay the rate. This is beneficial to boost your credit score.

• Pay off your credit card dues timely: To maintain a healthy credit you must pay off the credit card due fully each month. This helps to manage your credit score as well as lowers your chances of paying high interest rate.

Step 3: Use AxcessRent to Report Rent Payments

Because of rapid changes, renters can now report their monthly payments to credit bureau to build/improve their credit scores. In the past paying your rent was not relevant with your credit score, however, in the present context firms like AxcessRent have brought a drastic change in it. So, let’s learn how you can report your payment with the help of Axcessrent:

Register with AxcessRent: To start your journey towards building your credit score as a renter first of all get registered in AxcessRent to report your rent payment. This tool will help you submit report about each of your payment on time that will help you increase your score.

Next, make sure you notify your landlord/property management about your interest and encourage them to join as well. Because as of today, landlords and PMCs still need to verify the rent payments with credit reporting agencies like (axcessrent) in order to report accurate and legimate payments. 

Make Sure to Pay on Time: As you are reporting about your rent payment, make sure you don’t miss out on any dates. Pay your rent timely to not be marked negatively on your credits.

Keep an Eye on Your Monthly Credit Score: Use tools like Credit Karma and Experian to monitor your progress on your credit score that have been increasing due to timely rent payments. 

Step 4: Maintain a Low Debt-to-Income Ratio

Debt-to-Income Ratio matters alot to determine and validate your creditworthiness. This ratio showcases what percent of your monthly income is separated for debt repayment. One must know how to maintain this ratio.

Determine Your DTI Ratio: To have a DTI less than 36% is considered to be a positive sign to uplift your credit score. So, you must try to maintain it in this level. However, if you don’t know your DTI then simply, divide your gross monthly income by the total amount of loan payments you make each month. Typical goal is to not max more than 30% of your credit limit. So for example, if you’ve $1000 limit, then try to keep your balance below $300 if not zero, by end of the month.

Reduce High-Interest Debt: If you are able to keep your debt lower, this will help you improve your DTI as well as make your credit score get higher. So, to do so, minimize high-interest debt, such as personal loans or credit card debt. 

Step 5: Utilize Credit-Building Tools and Apps

There are different apps and tools available in the market that are built  to help you improve your credit. You can use the available tools to track your credit and have some personalized tips on building it efficiently. Apps like Credit Karma, Grow Credit, and more helps you with your credit score, and also let’s you know about the changes in your credit score. Using different tools like these will help you to create a stable credit journey on your own. 

Step 6: Consistently Check Your Credit Report

To build and maintain your credit score, you must keep a constant eye on your credit report. By monitoring your credit score frequently, you can rectify any occurred errors, or even find out any chances of having identity theft.  To monitor or check your credit report you can follow this ways: 

• Obtain Free Annual Credit Reports: There are mainy three major credit bureaus, Equifax, TransUnion, Experian. So, from these three bureaus you can obtain free credit report once every year.  Along with it for easier access, you can simply go to AnnualCreditReport.com to find the available report.

• Establish Credit Monitoring: As you get alerts if there are any issues or changes in you credit report through the credit building apps, make sure you do not ignore them. You must be aware about the notification and take them into consideration immediately for identification of foul play in the initial stage. Log into each credit bureau website and request to freeze your account immediately if you suspect someone stole your identy. 

Starting to build your credit today will mold your future

Establishing a good credit score as a renter is now not that big of a dream for many if the methods given in this article is followed. So, get started now to grow bigger gradually. Make sure you are consistent with what you are doing to improve your scores. Renting should never be an obstacle for your better credit score, so take the action now. 

Building credit as a renter might seem challenging at first, but with the right strategies and tools, especially with a platform like AxcessRent.com, you can create a strong financial foundation. By understanding the importance of credit scores, using credit-building tools wisely, and consistently monitoring your credit report, you’ll be well on your way to achieving a robust credit profile. Remember, your journey to financial stability starts today, and every step you take brings you closer to your ultimate goals. Embrace these practices, stay committed, and watch your credit grow.