This post is by Bernie Carr, apartmentprepper.com
There are always a lot of prepper discussions about relocating to a safer area, or purchasing rural property, but there is one factor that is often left out: actually qualifying to buy or lease that place. Whether you are an apartment dweller or home owner who is trying to move, there is one thing, besides income, that will always be a requirement when you are ready to apply for a lease or buy property: your credit score.
Why you should check it now:
- Your credit score is a big factor in determining whether your application to rent a new apartment or qualify for a loan to buy a property is accepted.
- Many potential employers also check credit scores during the hiring process, so the score could impact your chances of getting a job. This does not seem fair but that the way it is.
- Credit history is also considered for calculating auto, renter’s or homeowner’s insurance premiums. I know. When I found this out I was shocked. Insurance companies seem to feel that persons with bad credit are more likely to file a claim.
- Another good reason to check your credit score is to watch for any signs of identity theft.
How to get a free copy of your credit report
The Fair and Accurate Credit Transactions Act of 2003 (FACTA) entitles you to a free copy of your credit report each year. Go to www.annualcreditreport.com
Be careful if you are just searching online and try to get a free credit report from just any site- there are a lot of scams out there that try to lure you into ordering your report from them, but lock you into a paid subscription. To be on the safe side, go the the Federal Trade Commission website for more information on getting your free credit report.
One free site that a friend recommended to get a quick look at your credit is creditkarma.com They show what TransUnion, one of the big three credit reporting agencies reflects about you. I gave it a try and I did not get any solicitations or suspicious tactics.
You won’t really be able to clean up your credit report completely, but you can point out any errors you find to the credit reporting agencies and they will research the items. You can also have them add a explanation from you. This process takes time, so ideally, if you haven’t checked already, you should do this 60-90 days before making a big purchase or moving.
What is a good credit score? Generally a score above 700 portrays “good credit management” to a lender.
Money saving tip:
Every apartment or landlord will ask for an application and charge you a non-refundable fee to pull your credit. The fee ranges from $25 to $40 (per person, so it’s double if you are applying with a spouse or partner) and therefore can get pretty steep especially if you apply to several places. If you get rejected, your application fee is not returned. Before shelling out the money, try to find out the minimum score that they will accept. Ask if they work with people that are below the cut-off, such as charge a higher rent, or if they reject them completely. If yours is well below the cut-off, then you know you are likely to get turned down. Save yourself the money and keep looking.
If you are buying a property or vehicle, some lenders work with people with less than stellar credit, but may do one or more of the following: approve the loan at a higher interest rate, ask for a co-signer or a higher down payment.
Being prepared means identifying potential pitfalls that might trip you up. Having a bad credit score could hurt your future chances for a job or a place to live. That is why it is important for you to check it once a year.
© Apartment Prepper 2016
Updated from a previous post that was originally published on Feb 27, 2014