While some older Gen Zers were able to become homeowners during the Covid-19 pandemic, most did not. They either became renters or never moved out of their parents’ house.
How building credit can help you rent your own place
Landlords may look at prospective tenants’ credit to assess their ability to make payments on time. Having a good track record with credit can boost your chances that your application is accepted, and with favorable terms.
In short: A strong credit history can make you a competitive candidate.
Three ways to build credit
Whether you are on the rental market sidelines or have your eyes set on the ideal apartment in your area, here are three ways to strengthen your credit score:
1. Leverage bills you routinely pay
Traditionally, recurring household bills such as utilities and internet service do not show up on your credit report — and so they are not factored into your credit score.
However, programs such as Experian Boost, StellarFi and UltraFICO allow users to build credit based on alternative metrics such as banking activity and payments for streaming services, electric bills and mobile phone plans. Once you are renting a place, some programs also report those payments as a way to build credit.
2. Become an authorized user
You can build good credit based on another person’s credit history when you become an authorized user on their credit card. Under this status, you can use the card, but unlike a cosigner, you’re not on the hook for the balance. This is usually an ideal option for parents who want to help their children build credit.
However, make sure the person whose account you’re piggybacking has a strong credit score. If you become an authorized user with someone who is not as responsible with their debt, it won’t help your credit.
Additionally, the card issuer must report your payment history to the major credit bureaus. Otherwise, it won’t do much good to be an authorized user. Check the credit card company’s terms and conditions to see how it handles that relationship.
3. Consider a secured credit card
One of the most straightforward ways to start building credit, especially for a young person, is to look into a secured credit card. A secured credit card can be easier to qualify for because it requires a security deposit. That’s typically tied to your credit line. In other words, you are setting up your own credit limit by how much you pay up front.
The ideal secure credit card for someone starting to build credit won’t carry an annual fee, reports payments to all major credit bureaus and has a built-in path toward an unsecured credit card in the future with the same issuer once you build up a good credit
Call us at (480)205 2234 to get more information on current mortgage rates.
