When it comes to financing real estate or renting a home (Birmingham, AL or beyond), it is pertinent that you have a good credit score – this is especially true in today’s real estate market.
Your credit score tells the lender or the property owner a lot about you, including your tendency to pay your bills on time. The higher your credit score is, the lower the risk the bank, landlord, or property manager has to take when accepting your application.
The first step in increasing your credit score is to obtain a copy of your credit report so that you know your starting point. Fortunately, you can get three free credit reports each year. These reports are provided by TransUnion, Experian, and Equifax.
When you receive the report, you will get a credit score ranging from 300 to 850. Although lenders do not have a specific cutoff score, the higher the credit score the better.
Understanding Your Credit Score
Your credit score is essentially broken down into five categories, each having a different weight. The categories are as follows:
Payment History – 35%
Credit Utilization – 30%
Length of Credit History – 15%
Types of Credit Used – 10%
Recent Search for Credit / Obtained Credit – 10%
Tips for Increasing Your Credit Score
Now that you know how your credit score is calculated, what can you do to increase your credit score over time (this is not an overnight process)?
Pay your bills on time, every time
Pay down your current debt
Avoid applying for a lot of new things that require a credit check at once
Apply for a credit card and use it lightly if you do not already have one
Check your credit score at least twice a year to make sure you are not a victim of identity theft
At the end of the day, the most effective way to increase your credit score is to pay your bills on time, reduce the amount of debt you have, and keep a check on your credit report to ensure accuracy.
If you are looking for a rental home in Birmingham, AL or a property manager, then contact gkhouses.com today at 205.940.6363.