How to pass a rental credit check

When you find a rental that fits your budget and requirements, you want to make sure your application floats to the top of the pile. Landlords and property management services want someone who will pay rent on time, won’t cause trouble, and will keep the place in good condition.

A credit check is one of the tools landlords use to screen rental applicants. A 2014 study conducted by credit bureau TransUnion, found that 43 percent of landlords surveyed use credit checks as part of their leasing process. In other words, bad credit might keep you from the place of your dreams, and good credit can help you stand out.

Here’s an overview of why your credit matters and what landlords might look for when reviewing your application.

Your credit history can matter as much as your credit score

Landlords sometimes separate applicants by their credit scores, but your credit report can be even more important. Casey Fleming, author of “The Loan Guide: How to Get the Best Possible Mortgage,” manages rentals in Albuquerque, New Mexico and looks for, “the story the report tells.”

“If there’s a pattern of weak credit over a long period of time… then even if they’ve brought their credit score back up I won’t rent to them,” said Fleming.

On the other hand, Fleming isn’t bothered if a single life event, such as a divorce or illness, led to derogatory marks if the applicant has an otherwise good record.

Landlords like Fleming want to know the details contained within one of your credit reports, not just the resulting score.

Your credit reports keep a record of late payments, foreclosures, evictions, bankruptcies, and other derogatory marks from the last 7 to 10 years. Your report also has positive information, such as on-time payments, and identifying information, such as your Social Security number and date of birth.

Mindy Jensen, community manager for the real estate investing social network and information site Bigger Pockets, also emphasizes the importance of your report.

“A past eviction is the kiss of death to most landlords,” said Jensen.

However, “some [landlords] will take into consideration the timing of that past eviction.” If the eviction happened years ago and you have a valid reason, you could still be a strong candidate.

Be upfront about past mistakes

Check your credit reports for negative marks before sending off a rental application. You can order a free credit report from each national consumer credit reporting company (Equifax, TransUnion, and Experian) once every 12 months at Several companies also give you free access to your credit report throughout the year.

Review your credit reports for potential red flags and write down explanations that can help ease a landlord’s worries. You might want to offer explanations with your application rather than waiting for the landlord to ask. For example, you could have a maxed out credit card because you consolidated credit card debts onto a balance-transfer credit card with a zero percent interest rate offer. That could show financial prowess rather than an aptitude for overspending.

Holly Porter Johnson and her husband Greg, owners of the ClubThrifty personal finance blog and rental properties in central Indiana, take these explanations to heart when considering applicants.

“We do run a credit check,” said Johnson, “but are generally accepting of past mistakes if renters are forthcoming from the start.”

The Johnsons also place a lot of value in a strong reference from a previous landlord.

Start working on your credit ASAP

In addition to preparing explanations of negative marks, you can start taking steps to improve your credit. Not only can a higher credit score help make the rental process easier, it may save you lots of money if you decide to buy a home later and need to take out a mortgage.

There are five major factors that influence your credit score. The two most important are your payment history and the amounts you owe.(Source) Make a habit of always paying bills on time, even when you can only afford the minimum payment. Also, try to only use a small portion of the credit that’s available to you. For example, if you have a credit card with a $5,000 limit, try to keep the balance below $1,500. (Source)

What else do landlords want to see?

Property managers and landlords can order screening reports to compare applicants. The report often contains your credit history, a criminal background check, an eviction report, and other background information. You might also be asked to submit a bank statement, pay stub, and previous landlords’ contact information with your application. (Source)

How can you improve your chances if you have poor credit?

A clean criminal background check, job stability, a high income compared to the rent, large savings, and positive references from previous landlords are all important. If you have all of that and a low, or no, credit score, you could still be a great rental applicant. You can also pre-empt objections by including letters of recommendation from previous landlords or employers in your application.

If you’re struggling because of your credit, a roommate who has good credit could ease a landlord’s worries. Asking a friend or relative to co-sign the lease is another option. However, be cautious about who you ask. If you’re unable to make a payment, the co-signer will be responsible for the debt.

There may be financial fixes to your credit problems as well. For example, putting up a larger security deposit, paying several months’ rent in advance, or paying the landlord with automatic bank transfers. Or, if you really want the apartment, agree to pay slightly more in rent.

Bottom line – your credit matters

Your credit report or score could make or break your application. Be prepared to offer explanations for negative marks on your credit report and start taking steps to improve your credit score.  Also, remember that your credit is only one factor that landlords consider. A strong co-signer, letters of recommendation, and demonstrating a willingness and capability to make rental payments on time can be just as important.

Your credit score is your financial passport. It is needed to secure a line of credit, open a bank account, get a home or auto loan, and sometimes even to secure employment. But what do you do when your score is below a “fair” rating? Is there any way to repair your credit score on your own?

Of course! There are several simple steps you can take starting today to repair your credit score. We’ve collected some of the best advice from trusted professionals across the financial industry, and compiled the list here of the 15 best ways to repair your credit score.

1. Educate Yourself & Learn from past Mistakes –


The first and most important step to recovering from bankruptcy is learning from the mistakes that got you into the mess in the first place. Get acquainted with your credit reports, they’re free once a year. Look over your past history paying close attention to the growing amounts of debt over time and the increasing late payments that followed. It’s not hard to see how quickly things get out of hand. Next, learn how to manage your reports: monitor potential negative marks, getting errors removed, etc.

This is also a good time to reflect on your relationship with money and the possessions you want to buy with it. It’s a time for hard truths and, in most cases, a total change of attitude towards spending. If you aren’t brutally honest with yourself or willing to make sacrifices to your lifestyle, you’ll be back in bankruptcy court before you know it.  It’s a great time to start being frugal. (Source:

Related article: How To Make Clever Money Decisions by Improving Your Financial IQ

2. Visit to Get Your Free Credit Reports – Federal Trade Commission

Improve Credit Score

The Fair Credit Reporting Act (FCRA) requires each of the nationwide credit reporting companies — Equifax, Experian, and TransUnion — to provide you with a free copy of your credit report, at your request, once every 12 months. The Federal Trade Commission (FTC), the nation’s consumer protection agency, enforces the FCRA with respect to credit reporting companies. Visit to get your free credit reports yearly.

A credit report includes information on where you live, how you pay your bills, and whether you’ve been sued or have filed for bankruptcy. Nationwide credit reporting companies sell the information in your report to creditors, insurers, employers, and other businesses that use it to evaluate your applications for credit, insurance, employment, or renting a home. (Source: Federal Trade Commission)

Check out our Credit Reporting reviews section for reviews on other credit reporting tools like CreditKarma and Credit Sesame.

3. Dispute Old Negatives – MSN Money


Say that fight with your phone company over an unfair bill a few years ago resulted in a collections account. You can continue protesting that the charge was unjust, or you can try disputing the account with the credit bureaus as “not mine.” The older and smaller a collection account, the more likely the collection agency won’t bother to verify it when the credit bureau investigates your dispute.

Some consumers also have had luck disputing old items with a lender that has merged with another company, which can leave lender records a real mess. (Source: MSNMoney)

4. Pay for a Deletion –

Delete Key

When a debt goes unpaid for a long period of time, it’s typically sent to collections. Once it’s reported as a collection account, your score will take a hit and the negative information will stay on your credit report for seven years. If you’ve got some old collection accounts hanging around, you might be able to get them off your report a little early by paying up. Just make sure you get the collection agency to agree to the deletion in writing before you hand over the cash.

If you’ve only had one or two late payments, you could call up your creditor and ask if they’ll cut you some slack and delete the negative information. It’s best to ask for the removal as soon as possible after the information is reported to try and minimize the impact on your credit. (Source: SmartAsset)

5. Make Double Payments – Fix My Credit University

Cash Money

If you can afford to, make double payments on your auto loan, student loan, and credit cards.  However on the auto loan and student loans, make sure you are paying down the principal. Sometimes they will automatically just add the additional payment to the next months payment, rather than paying down what you owe vs. the interest rate.

6. Avoid Prepaid Cards – Money Crashers

Credit Card Shopping

Stay away from prepaid debit and credit cards, as they charge fees and high interest rates. Offered by large companies such as Green Dot, Walmart, and NetSpend, they come emblazoned with the Visa or Mastercard logo – but don’t be fooled. You end up paying almost double for any purchases you charge with cards such as these. Furthermore, they don’t typically show up on your credit report, so there is no real benefit to using them. (Source: Money Crashers)

7. Enjoy the Simple Things – Lexington Law

Credit repair requires a measure of sacrifice in the beginning. Changing your lifestyle to accommodate a working budget, debt reduction, and good habits is preferable to a life without direction. In the short term, learn to appreciate the simple things in life, such as:

  • Sleep: Naps are common in college. If you’re broke and on a budget, why not enjoy a siesta?
  • Free stuff: Who says fun should come with a price tag? Go online and look for free things to do in your community. If you live in a rural area, focus on home improvement projects or a personal hobby like reading. There are tons of free eBooks and local libraries to suit every literary taste.
  • Spending time with friends: When the company’s good, you don’t need to spend money to enjoy yourself.
  • The Internet: You’re paying for it, so why not explore it? We live in the information age. Pick a topic (suggestion: credit repair) and start digging.

(Source: Lexington Law)

Related article: 10 Tips to Stop Overpaying On Your Entertainment Needs

8. Contact a Credit Repair Professional – Experience

Financial Planner

Credit repair companies can assist you with the process of checking your credit report regularly and providing assistance by contacting credit reporting agencies about any errors or corrections. In addition, they can provide assistance for planning for repair.

A credit repair professional is on your side and works with you when it comes to credit repair. Their objective is to help you obtain your financial goals.

How can you find a reputable credit repair company? The first step if to find out if they are honest with you about the services they provide. The more willing they are to plan and talk to you about your credit, the more likely they’ll be there to help you with future questions.

It is also a good idea to get recommendations from others. Testimonials from other clients can give real life examples of what the credit repair company can do for you.

In all, if you feel comfortable with whom you are working, ask them about a plan and a proposed amount of time in which your credit can be repaired. If it sounds reasonable and you are happy with the way it is presented, then the chances are the credit repair company is a good fit for you. (Source: Experience)

We’ve got some excellent suggestions for credit pros on our Credit Repair reviews section, with Score Cure on top.

9. Don’t Apply for New Credit – Money Under 30

Credit Card Statement

Finally, resist the temptation to open a new credit card, even when a store offers a discount on your purchase for doing so. Each time you apply for credit is listed on your credit report as a “hard inquiry” and if you have too many within two years, your credit score will suffer.

Once you’ve fixed errors on your credit report, begun budgeting and paying off debts, be patient. It will take months or even a couple of years for your credit score to improve, but if you plan on buying a new home, it’s well worth it. (Source: Money Under 30)

10. Avoid Closing Credit Cards That You’ve Had a Long Time – Forbes

Credit Cards

Since this can negatively impact the third factor: the length of your credit history. If you have a card with an annual fee, request to switch the card to one without a fee instead.

You may wonder when a good time to close old accounts is, if ever. We’ve got an article for that.

11. Have Credit Cards, But Manage Them Responsibly – FICO

Credit Card Security

In general, having credit cards and installment loans (and paying timely payments) will rebuild your credit score. Someone with no credit cards, for example, tends to be higher risk than someone who has managed credit cards responsibly. (Source: FICO)

12. Pay Off Your Credit Card Balance – The Huffington Post

Credit Card Balance

This is the easiest way to improve your credit score quickly. One of the major factors of your credit score is how you are using your credit. A big factor of that is your credit utilization ratio. This ratio compares your overall credit limit with the amount of credit you are currently using. Say you have an overall $10,000 credit limit and are carrying a balance of $5,000 total across your credit cards, then your credit utilization ratio would be 50 percent. Most credit experts advice to keep your credit utilization ratio below 30 percent, but if you can get it to zero, it will help dramatically raise your credit score.

If you can’t pay off your entire balance, even paying off a little can help. The lower your credit utilization ratio, the more available credit you have and the better you look to outside lenders. Even paying of 10 or 20 percent of your overall balance can help. (Source: Huffington Post)

13. Pay Your Bills on Time – Experian

Pay Bills On Time

Paying your bills on time is the most important contributor to a good credit score. Even if the debt you owe is a small amount, it is crucial that you make payments on time. In addition, you should:

  • Minimize outstanding debt
  • Avoid overextending yourself
  • Refrain from applying for credit needlessly

Applications for credit show up as inquiries on your credit report, indicating to lenders that you may be taking on new debt. It may be to your advantage to use the credit you already have to prove your ongoing ability to manage credit responsibly. (Source: Experian)

14. Automate Good Behavior – Credit Sesame


What it takes to have a good credit report and score is doing the right things consistently and over long periods of time. Some of the things you need to do can be done automatically—like paying your bills on time. Use your bank’s auto-pay feature and enlist the help of apps like [] to help you remember when your bills are due so you can make sure to have money in your account to cover them.

However, if the underlying problem is overspending and you don’t have money, brainstorm solutions. Create a budget that doesn’t deprive you, but still allows you to meet all your financial obligations. Or, look at taking on a second job to help meet your financial goals.

15. Pay the Balances Due on Any Collection or Charged-off Accounts – Bankrate

Final Notice

Paying what you owe will not immediately make a significant improvement in your credit score, but anyone considering granting you a loan or new credit will want to see that you did pay what you owed, even if it was late. Finally, pay down balances on your open credit card accounts to between 30 percent and 50 percent of your credit limit. Better yet, pay them off in full, and pay them in full each month thereafter. Low balances relative to your limit will add points to your score. (Source: Bankrate)

FICO, the creator of the most widely used credit scoring software, announced on Thursday that it will be releasing its newest product very soon. FICO® Score 9 will include three major changes which could potentially impact millions of consumers across America who are currently struggling with certain kinds of debt.

Related article: 9 Reasons Why Some People Have Above Average Credit

What does this mean for you? Don’t worry, we’ve got you covered. We’ve answered the ten biggest questions about the new changes and how they might affect your credit score:

1. What changes have been made?


FICO announced that there are three major changes to its latest version of how your credit score gets calculated.

  1. Debts that get paid after they have been sent to collections will no longer count against the consumers score.
  2. Medical debts will have a far less significant impact on overall score.
  3. Newer evaluation model of consumers who do not have much credit history.

2. How is this different from before?


Your FICO score has always been (and will continue to be) calculated based on the information provided in your credit report. Up until now if you have accounts that have gone to collections, those debts have generally been regarded equally, whether they were now paid or unpaid. Even if you have paid the account in full, currently all accounts that have been sent to collections continue to count against you for seven years (similar to bankruptcy filings).

However, with the new version of the calculation, any collection accounts that have since been paid off or settled will no longer count against you when your score is figured. This provides more incentive for the consumer to take care of accounts that have been put in a collection status.

Additionally, any medical debts that are accumulated will have a less significant impact on your score. According to the Federal Reserve, medical debts account for more than half of all unpaid debts that are currently in collections.

The third change to how your credit score gets calculated will impact those with little or no credit history. Currently when an individual has limited credit history for review, their score is lower which can negatively impact their ability to acquire new credit, and may not be an accurate reflection of their overall credit risk.

3. Why are these changes happening?

Pay Cash

These revisions to how FICO calculates credit scores are coming after lenders and regulators have raised several questions with regards to the fairness of the formula. This comes after several reports from various agencies across the United States further backing up these claims.

Experian, one of the three major credit bureaus in the US, reported in July that there were currently around 64.3 million consumers in our country that had a medical collection on their credit report.

Compare companies like Experian, CreditKarma, and myFICO on our Credit Reporting Reviews page.

In May, the Consumer Financial Protection Bureau released results of a study which shows that Americans are being over-penalized for medical debt that has been sent to collections. The CFPB released these findings and acknowledged that medical debts should be treated differently since they are different than other debt in the sense that a consumer doesn’t usually choose to incur the debt and it is most often a result of unplanned circumstances.

Another common cause of medical debt being sent to collection agencies is due to the fact that many Americans are not aware that they have an amount owed because they were under the impression that their insurance company covered the charges. Oftentimes, disputes between medical billers and insurance organizations result in a negative mark on the patient’s credit report. They may be completely unaware of the fact that there is any problem at all until they get that first collection call.

The Urban Institute recently reported that approximately 35% of Americans have some form of debt that has been sent to a collection agency. The Federal Reserve concurs with these findings and goes further to say that more than half of collection accounts are medically related.

According to the National Center for Health Statistics at the US Centers for Disease Control and Prevention, one in four families struggled to pay medical bills in 2012 with over 1/3 of them saying they had costs they could not afford to pay at all. According to the CDC report, which was released in January of this year, even families who have medical coverage for all members still struggle with medical bills, with 21% of them unable to pay the expenses associated with health care.

4. How will this affect my credit score?

Credit Scores

The impact on consumers credit scores will vary based on the types of debt reported in each individual’s credit report. If the majority of your negative marks and unpaid accounts are medically related, you could potentially see an increase in your overall credit score of up to 25 points or more.

If your credit score has been damaged due to unpaid bills that have since been paid off, you could see a much higher increase to your score. According to another recent publication, there are approximately 107 million Americans currently who have a collection account on their credit report, but nearly 10 million of those have no current balance owed. These individuals could potentially see the biggest increase in their FICO Score once the new program goes into effect.

Furthermore, for those consumers who have yet to establish a credit history, they may see some changes to their score as well, putting them in a better position to increase their ability to acquire new credit in the future.

While we’ve got you, learn about the Top 10 Factors That Affect Your Credit Score here.

5. What does this mean for consumers?

Credit report with score

The fact that millions of Americans could see a significant increase in their credit score without having to lift a finger could have a far reaching impact. A credit score increase could qualify many consumers for loans when prior applications may have been denied, or for better interest rates than what they currently have. This alone could save consumers thousands of dollars.

But that’s not all. Anybody who has ever applied for a line of credit knows how important their credit score is. But it is becoming more common these days for landlords to require a credit check before they approve a new tenant, as well as some employers including a credit inquiry along with other pre-employment background checks before they decide to hire an individual. Having an increase in the overall value of their score could open up many new opportunities for individuals.

6. What does this mean for lenders?

Financial Planner

Since the primary purpose for lenders to inquire about an individual’s FICO Score is to attempt to determine what level of risk is associated with offering credit to that individual, creditors benefit from having the most precise calculation available.

The new system of calculating a person’s credit-worthiness is intended to more accurately reflect their current risk level. This allows lenders to be better informed and ultimately more aware of whether an individual is worth the risk of extended credit to.

Additionally, with consumers who were once feeling overwhelmed by debt but now qualify for loan refinancing or other money saving options, lenders may see a reduction in the number of bankruptcy filings that occur each year.

7. When does this go into effect?

Time is Money

While FICO has announced that this latest version of its calculating software will be available later this fall, it may take months or even years before the consumer gets to feel any of these new benefits. This is due largely in part, because lenders are not required to upgrade to the new version when it becomes available.

FICO recently reported that since its last introduction of a new software version in 2008, about half of their customers had switched to that model. This means that of all the businesses and organizations out there that check an individual’s credit score, only half are currently using the most up to date calculations while the other half are using a version that is at least 10 years old or older.

While the most widely used version of FICO by credit lenders is the FICO 08 version, the majority of mortgage lenders still use the 04 version released 10 years ago. This slow adaptation to upgrades is most likely due to the fact that most banks and lenders like to first analyze what kind of effect the new version would have on their existing portfolio by seeing how it affects others in the industry.

But according to Jim Wehmann, executive vice president for scores at FICO, the newest version FICO® 9 offers too many advantages to lenders that they are more likely to upgrade sooner.”The advances in FICO® Score 9 provide significant incentives for lenders to upgrade from earlier versions of the FICO Score,” Wehmann said.

“U.S. lenders can more consistently and precisely assess new applicants and existing accounts with a more robust credit score built on the most current credit data available, while minimizing operational hurdles associated with adoption and compliance. We stand ready to help lenders make that upgrade as smoothly and quickly as possible.”

8. What is FICO?

FICO logo1

FICO is a California based company that provides analytics software and related services. Created in 1956, the organization was originally known as Fair, Isaac and Co before adopting the name FICO in 2009.

FICO is one of the pioneers in the credit rating industry, providing lenders with analytical software that standardizes how consumers are judged when it comes to the level of risk associated with extending them credit.

The FICO score was introduced in 1989 and is the most accepted and widely used method of assessing a person’s credit report today. Amongst all of the US lending decisions being made today, 90% of them are dependent on the borrowers FICO score. Since its original launch 25 years ago, FICO has released 5 revisions, including the new FICO® Score 9 due to be released this fall.

9. How does FICO come up with my credit score?

FICO News Graph

The actual logarithm used to come up with that magic three digit number is a closely guarded secret. After all, the ability to produce these credit scores as accurately as they do is what keeps FICO in business. What we can tell you though, is what factors are involved in determining what your credit score will be.

The largest piece of data that goes into the credit score equation is information with regards to your payment history. Your debt-to-credit ratio is the next largest key item, with your length of credit history, types of credit used and your total new credit inquiries following in importance.

Because FICO has released multiple version of how your score is calculated, it is helpful to find out which version calculated any credit score you receive. You can always ask the lender which version was used so that you know how your score compares across the different models.

10. Is FICO the only credit score calculator?


No, there are actually several other organizations that also offer credit score calculations, but none as widely used as FICO. VantageScore was introduced in 2006 as a joint venture by the three major credit bureaus to try to compete with FICO in the credit rating industry. Their initial product produced scores with a range from 501-990, but later adopted the same 300-850 range that FICO uses in 2013.

The concept of not including paid collection accounts when calculating the credit score is one that VantageScore already put in place last year, beating FICO to the punch on this major revision of how credit scores are determined.

Credit scores play a critical role in our lives just about every day, serving as our financial passport to getting the credit we deserve. While these new changes to how the FICO credit score is calculated are widely supported by consumers and lenders alike, it may take months if not years before any of the results are seen in everyday lending.

These new changes will ultimately affect everyone in a positive way, with consumers benefiting by becoming more “credit-worthy” in many situations, and lenders benefiting by having an enhanced result and greater accuracy.

If you’re ever on a game show and they ask you what your most important financial number is, make sure to answer, “my credit score.”

This 3-digit number is responsible for much of what happens in your financial life. It is your credit score that determines how high or low the interest rates you pay are and whether you qualify for credit in the first place. If you rent your home, your score can determine how much of a security deposit you pay, and the rate car insurance providers will give you.

Of course, it’s hard to work on getting your credit score as high as possible without the facts, so consider these 10 factors that affect your score.

1. Payment History

Payment History

According to FICO’s “What’s In Your Score,” your payment history determines a whopping 35 percent of your credit score. It makes perfect sense when you think about it. Would you loan someone with a poor payment history your money? Probably not, unless the person is a really persuasive relative or a good friend.

Payment history includes a wide variety of account types, including major credit cards, retail accounts, installment loans and mortgage loans.

If you pay your bills on time and never miss payments, you will score high on payment history. On the other hand, if you have late and missing payments or worse, charge-offs, which indicate that debt collectors gave up on you paying your loans, your payment history score is likely to be low.

2. Amount of Debt You Owe

Student Loan Debt

Thirty percent of your credit score is determined by the amount you currently owe, and if you’re carrying large amounts of debt. How much is too much? Lenders have formulas (read: debt to income ratio) to determine how much debt is too much for you.

If you owe a lot of money on several accounts, including being maxed out on some, this signals to lenders that you are at risk of default. Then again, if you owe small amounts on credit cards and have a substantial amount of unused credit (a low credit utilization rate), that will positively affect your credit score.

Some say that having a lot of unused credit could possibly be a risk. After all, what’s to say you won’t go on a shopping spree and load on the debt tomorrow? Again, there are a lot of things that factor into your score, but if you’re wondering, StackExchange has an excellent answer to this question. How bad is it to have a lot of credit available but not used?

3. Length of Credit History

Credit History form

Credit mastery is like any skill. The longer your credit history, the likelier it is you’re “good at” credit. Fifteen percent of your credit score is determined by the length of time you’ve had credit. This means that holding on to your first credit card, no matter how small the limit, is a good idea.

There’s a reason why some people have above-average credit. Here’s our blog post explaining how they’re handling credit differently.

4. Types of Credit

teal credit card digits close-up

Ten percent of your credit score is based on the type of credit you have in use. FICO looks at the various accounts you have and determines if it is a well-balanced mix. Those with the highest scores don’t just have credit cards, but finance company accounts, mortgage loans and installment accounts, and so on.

In addition, creditors consider the number of accounts you have in use. A lot of accounts in use can have a negative impact on your score, whereas just a handful of credit cards used will likely increase your credit score. Do keep in mind that while you don’t want an overabundance of accounts in use at one time, it’s better to use part of the credit on several cards than to max out one card. has a great article here on how to improve your credit score by using different types of credit.

5. Many New Credit Accounts

Loan Application Approved Shows Credit Agreement

A final 10 percent of your score is affected each time you take on more debt. While one new small account is unlikely to make much of a difference in your score, several new accounts in a short period of time will. New accounts generate inquiries, which are recorded on your credit report and are considered negatives.

6. Maxed Out Credit Cards

Credit Cards

Not exactly the same as having a lot of debt, having a lot of maxed out credit cards shows that your credit utilization is high. Having a high percentage of your credit limit used up doesn’t show potential lenders that you’re good with credit, just that you’re good at having a lot of debt and not paying it off. The ideal “low” credit utilization is no more than 20% of your available credit across all accounts.

7. Accounts Sent to Collections


If a debt you owe is sent to a third-party debt collector in order to attempt to collect payment from you (and it’s on your credit report) your credit score will plummet. It is much better for your credit score to settle debt before it is sent to collections.

If the debt remains unpaid even after it’s sent to collections and the court gets involved and a judgment is made, this will sink your credit score even more. Paid judgments are less harmful to your credit than unpaid ones.

8. Loan Defaults

Default on Loan

Like a credit card charge-off, a loan default shows that you did not meet your financial obligations, which indicates that you are a credit risk. Lenders don’t like taking risks!

9. Home Foreclosure


Falling behind in your mortgage payments and then foreclosing is especially damaging. And good luck getting approved for another mortgage in the future.

10. Bankruptcy

credit after bankruptcy

Of all factors that affect your credit score, bankruptcy is the most damaging. Not only is it one of the most negative things that can happen to an individual, bankruptcy sticks to your credit report for 7-10 years. This makes any potential credit move you want to make during that time difficult, if not impossible. Considering the far-reaching, negative consequences of this financial solution, it makes sense to seek alternatives whenever possible, such as debt settlement or personal loans from friends and family.

Related article: Why You Should Consider Debt Settlement vs Bankruptcy

Use these factors to keep your credit score in tip-top shape. And keep in mind that various credit grantors employ their own sometimes seemingly mysterious methods and standards for determining your credit score, which means it’s likely to vary from lender to lender.

Don’t have your credit score, or a recent credit report? Check out or Credit Reporting companies reviews page for your best options.

Maintaining good credit is essential to your financial well being. If you ever intend to purchase a home or rent an apartment, or even get a new job, expect to have your credit pulled. The contents of your credit report, along with your FICO score, make all the difference between being approved or denied.

Many people believe that in order to have a high credit score, a high income is necessary. Of course, many lenders do consider your income in making credit decisions. But your income is not considered at all in the calculation of your actual FICO score. The following tips represent strategies that allow many people to obtain and maintain above average credit, whether they earn generous salaries or not.

Learn more on how to improve your credit score from the top 15 credit experts here.

1. They Pay Their Bills Before They Are Due

Due Date

Do you stretch your payments out to the last possible moment – and sometimes beyond? This is no way to raise your credit scores. People with above-average credit scores not only NEVER pay bills late, and often exceed their minimum monthly payment.

2. They Have Credit Cards – and Use Them


You may have heard or read that credit card debt is “bad debt.” “Good debt” then are student loans and mortgages, which can be considered investments. It is true that carrying large balances on credit cards is bad, especially if those credit cards carry hefty interest rates. But using credit cards is one of the best ways to improve your overall credit profile.

To stay on the “good” side of debt, keep balances low and maintain a consistent record of on-time payments.

Read about the types of debt that can actually help you in this post.

3. They Don’t Close Accounts in Good Standing


According to the MyFico website, the length of time that you have held credit accounts for 15 percent of your FICO score. So, that credit card you’ve had since college and kept in good standing? By all means, hang onto it. Even if it only has a credit limit of $300,  you could, and should still use it for small purchases.

4. They Carry Little or No (Bad) Debt

Debt Funny

People with above-average credit scores don’t max out their credit cards or blow wads of cash on cars that spend more time in the shop than on the road. Because they have good credit, people with sound financial profiles find it easier to afford great vacations or other enjoyable activities. But unlike people who have poor credit, people with above-average credit scores pay for those splurges with cash whenever possible.

5. They Monitor Their Credit Reports


There are two good reasons to keep tabs on what credit reporting agencies have included in your credit report: fraud and errors. Identity theft can ruin your credit before you even know there is a problem, and cleaning up the mess can take years. Errors in your credit report can also wreak havoc on your financial stability.

Have a common name like John Smith or Mary Jones? Be extra vigilant about checking your report for errors

6. They Use Different Types of Credit

Bank Loans

The MyFico website states that the variety of credit types included in a credit profile accounts for 10 percent of a person’s FICO score. So if you want to raise your credit score, consider taking a small loan from your bank along with initiating another type of credit. Of course, it is essential to maintain consistent on-time payments for those accounts as well.

7. They Make Derogatory Items Go Away


In the unlikely event that they miss a payment due to oversight or some unavoidable circumstance such as a job loss, people with above average credit scores are proactive. They contact their creditors and request a courtesy removal of derogatory items, and because they are good customers, creditors are often likely to grant their requests. People with above-average credit scores make other derogatory items go away the old fashioned way – by paying them off.

8. They’re Wary of Hard Credit Inquiries

Financial Planner

Every time a creditor or lender makes a “hard” inquiry into your credit profile, you lose approximately five points from your FICO score. Five points may not seem like much, but multiplied by half a dozen inquiries, 700 FICO score sinks to 670.

Racking up that many points is easier than you’d think, say, when comparing credit card rates for bad credit. Fortunately, it’s possible to reduce the hit on your credit score by concentrating inquiries related to a single purchase to a short period of time, say two weeks. In such cases, the inquires are grouped together and counted as a single inquiry, with only a single reduction of your credit score.

9. They Are Listed as Authorized Users on Someone Else’s Account(s)


If your own credit is so-so or nonexistent, an easy way to get an instant boost is to be added as an authorized user for an account held by someone with good credit. Many students have taken advantage of their parents’ established credit histories to qualify for loans on much better terms than they could manage on their own. On the downside, if the main account holder goes AWOL on the account, your credit will tank along with theirs.

Don’t Expect Instant Results

While some of the strategies above can produce significant increases in your credit score, you shouldn’t expect instant results. Also, in the case of #9, you may put your relationship at risk if you default or otherwise damage someone else’s credit. If you have so-so or even poor credit, you should expect to spend one year or longer on your efforts to improve your credit. And once you get it up to par, you’ll need to keep up the good work to maintain your sound financial footing.


When it comes to love, dating and marriage, your figure is important, particularly if you’re a woman. A recent study “discovered” that men find women with an hourglass figure – those with bust, waist and hips measurements with ratios in the neighborhood of 36-24-36 — more attractive. Shocking, I know.

An equally surprising study revealed that women are just as superficial, they just have different priorities. Here’s the bombshell. If you’re a guy, height and a six-figure salary work wonders with the ladies.

The Figure That Really Turns Her On


However, another figure is becoming increasingly important for single ladies seeking a relationship: your credit score.

According to a study by, an affiliate of Experian, 75 percent of women and 57 percent of men considered credit scores an important factor when evaluating a potential mate.

It may seem unromantic, cold or even outrageous to consider somebody’s credit score when deciding something as intimate and important as marriage. However, according to the same study mentioned above, women view financial responsibility (95 percent) and paying bills on time (92 percent) as the top financial attributes when evaluation a romantic relationship. A credit score just happens to be an excellent tool for determining whether someone possesses those attributes

Credit Score Dating is a Thing Now

Credit Score Dating

Several small dating websites, such as and, are riding this trend by requiring members to self-report their credit score as part of their profile. Users can then search or filter candidates based on their credit score. even provides a cheat sheet to help members assess the credit score of potential dates. Here’s a lightly edited version of it.

850 or higher: Start planning the wedding.
Anything above 750: Take him to see your parents.
700 to 750: Has potential as a fixer-upper.
650 to 700: One night out material, but bring your own cash.
600 to 650: Keep on looking.
Below 600: Run! They couldn’t even get a car loan.

Heartless, utilitarian and materialistic? Maybe, but it’s hard to argue with the logic. Dating, not to mention marrying, someone with a poor credit has serious consequences. Sometimes your credit score is more relevant to your financial health than your current salary or even your bank balance, particularly if you’re young or just starting a new career.

Your credit score determines whether you will qualify for a mortgage, a car loan, a lease, or even get a job. Banks will usually shy away from customers with a score of 660 and below. Even an average credit score (700 to 750) could mean your apartment lease application is rejected or you don’t qualify for the best interest rates and insurance premiums reserved for customers with good to excellent scores (750 to 850).

A Low Credit Score Could Be a Deal Breaker

Improve Credit Score

“Save both time and money; run a credit check on them. A score below 700 is a no-go for marriage.” That was the advice of a reader, Eric Jones, in response to an article on online dating published by

One in four men and women agree with Eric and consider a poor credit score a deal breaker when considering marriage.

So, if you’re a single guy looking for anything more serious than a quick fling, working on a 750+ credit score is a much better investment of your time than pursuing a perfect six-pack.

Money, and Credit, Matters

Credit and Cash

Obviously, a credit score is just a number.

It cannot define a person, and there are many reasons why a perfectly suitable partner may have a less than sterling score. Also, let’s not confuse being thrifty and paying your bills on time with being obsessed with money. Actually, a recent study of 1,734 married couples found that couples who don’t value money very highly score 10 to 15 percent higher on marriage stability and relationship quality than couples where one or both are materialistic. I know, another shocker: materialistic people don’t make the best marriage partners.

Nevertheless, credit scores do provide a useful snapshot of a person’s spending habits. And if you have to filter potential marriage partners, it does seem fairer to use figures they have more control over than their height, or waist-to-hip ratio.

My fellow writer Julie Bawden-Davis shares a few questions to ask your partner before getting married, #1 being if he or she has any credit card debt. These days, it’s unlikely that someone doesn’t have credit card debt, but getting the conversation started can save a lot of stress in the long run.

The hard truth is that money matters in relationships. A lot. Arguing about money, not children, sex, religion, politics, the in-laws, or even whose turn it is to do the dishes, is the number one cause of divorce. The same study also concluded that money arguments were both longer and more intense than all other marital squabbles.

In other words, choosing a partner that has similar views about money and budgeting is a smart move that can avoid a lot of heartache down the road. Protecting yourself financially is always a smart move.

This article was written by staff writer Andrew Latham. His mission is to help fight your evil debt blob and get your personal finances in tip top shape.

Improving your credit score is like trying to lose weight.

The principles are simple; putting them into practice, not so much. If you want to lose weight, you need to burn more calories than you eat. Sound simple?

Improving your credit score is also simple: check whether there are any errors in your credit report and build a good credit history by paying your bills on time every month.

Easier said than done, which is why in 2013 the average US household credit card debt was $15,270.

Many people fall for the promises of shady credit repair companies that claim they can boost your credit score instantly for a “small” fee. As with dieting, the quick-and-dirty fixes may be tempting–the beer-and-ice-cream-only diet is my all-time favorite–but, sadly, they don’t work.

Here are 3 ways to improve your credit score:

1. Protect Your Credit Report


About 35% of your credit score depends on your payment history, so make your credit payments on time and ensure the data on your credit report is correct.

Your credit score is a lot like your reputation, the stuff people say about you doesn’t have to be true to hurt you. Credit scores are based on what banks and other creditors tell the bureaus about consumers. Most of the time they get it right, but sometimes they make mistakes.

It could be you’re the victim of identity fraud, or maybe creditors have confused you with someone else with a similar name or social security number. It’s also possible you and your lender disagree on how much you owe, or whether you were late on a payment.

Just a single error on your credit report could significantly drop your score, which in turn could increase your mortgage and credit card payments by hundreds of dollars throughout the year.

SuperMoneyTip: You’re entitled to a free credit report from all three bureaus every 12 months. A neat way to monitor your credit report for free is to request your annual free credit report from a different bureau every four months instead of looking at them all at once.

Check your credit report and score with tips from our article Paid Vs. Free Credit Reports.

If you find a mistake, write a letter to the credit reporting companies and request an immediate correction. You will usually need to provide evidence, so make sure you have the documentation to support your claim.

2. Pay Down Your Credit Card Balances


About 30 percent of your credit score is based on your debt-to-credit ratio. To calculate your ratio divide your debt by your available credit. For instance, if you have $10,000 in debt and $30,000 in available credit, your ratio is 0.3 or 30 percent. The smaller that percentage is, the better. Keep your ratio at or below 10 percent and your credit score will thank you.

SuperMoney Tip: High credit card balances will hurt your score even if you have the good habit of paying your credit card balances in full every month. That is because some creditors will report your monthly charges as your balance. Keep your credit card balances low by making several payments throughout the month, particularly after buying big ticket items.

3. Don’t Dillydally When Rate-Shopping

Low Credit Card Rates

It is smart to shop around for the best rates when you need credit. The problem is that every time you apply for credit, the lender will perform a hard credit inquiry, which typically hurts your score.

This is because credit-score algorithms are built to view a search for multiple lines of credit as a red flag for credit overreach. Algorithms distinguish between a search for the best rates and trying to open multiple accounts by the length of time over which the inquiries are made. FICO scores, for instance, will count all the credit checks made on your report in the last 30 days as a single inquiry.

SuperMoney Tip: Get your ducks in a row by researching which are your best credit options before you file a loan or credit card application. Then send in all your applications within the same month.

Simple, but not quick and dirty

If you’re disappointed these tips don’t include a faster trick to boost your score, I feel your pain. I was also heartbroken when my beer and ice-cream diet failed to deliver the promised results. The thermodynamics science behind it seemed so logical!

The good news is that you can build a good credit score for yourself and enjoy the financial benefits it brings by following three simple principles: fix any credit history errors, pay your bills on time and keep your credit balances low. Easy, right?

This article was written by staff writer Andrew Latham. His mission is to help fight your evil debt blob and get your personal finances in tip top shape.
Photos: WikiHow, Credit Card Insider, Kiboo

Important Personal Finance

Money matters. How you manage it matters even more. According to a study from Princeton University’s Woodrow Wilson School, money buys happiness but only up to a point. Once you hit an annual household income of $75,000 the effect money has on happiness flattens out.

However, a sense of control over your finances does correlate with happiness — whether you are ultra-wealthy or of modest means – which is why personal finance skills are so important.

To get you started, here are 10 important things about personal finance you should remember.

1. Everybody Needs A Personal Finance Plan

The first and most important step in personal finance is to decide what goals you will pursue. A personal finance plan will force you to be specific about your financial goals. These will guide your financial decisions and help prioritize the use of your time and resources.

Include short-term goals, such as paying for rent or a mortgage; mid-term goals, like buying a car or saving for a vacation; and long-term goals, such as buying a house, building a retirement fund or saving for your children’s college education.

2. Figure Out A Budget

Personal Finance Tips

Take an honest look at how you spend your money. Take the next 30 days and track every cent you spend. Identify areas where you can reduce or eliminate spending. Now create a realistic budget and stick to it. Treat your personal finances as a CEO looks at a company: avoid waste and place your assets where they bring the best return on your investment.

3. Spend Less Than You Make

This is closely related to having a realistic budget, but it’s so important it’s worth emphasizing. It doesn’t matter whether you are on minimum wage or you earn millions of dollars a year. The route to bankruptcy is the same: spending more than you make.

In 2009, Sport Illustrated ran a piece on “How (and Why) Athletes Go Broke” that illustrates this point beautifully. According to the article, 78 percent of former NFL players go bankrupt or suffer financial stress within two years of retiring. The average salary for an NFL player in 2009 was $1.896 million, and the median salary was $790,000. How do you go broke when you have an income of $790,000? Easy, by spending $790,001.

4. Build an Emergency Fund

Important Personal Finance

Life has a habit of throwing you a curve ball every now and then. Whether it comes in the form of an unexpected pregnancy, the loss of a job, or a faulty car transmission, you need to be prepared for the unexpected.

On average, it takes more than four months to find a new job; so look at your budget and calculate how much money you need to cover your basic expenses for six months. A year is even better, particularly if your line of business is prone to layoffs.

5. Take Care of Your Health

Unpaid medical bills, not credit-card debt or underwater mortgages, are the number one cause for bankruptcy. Every year nearly 2 million people file for bankruptcy because they cannot afford to pay for their medical builds. Not surprising, when you consider a broken leg can set you back $7,500 and the average cost of a 3-day hospital stay is $30,000.

Although health insurance will not shield you completely from financial hardship, it will give you a fighting chance. Apply for health insurance today and take other practical steps to protect your health, such as not smoking, exercising regularly and maintaining a healthy weight.

6. Pay Off Debt First

Important Personal Finance

The average savings account in 2013 had an annual interest rate of 0.06 percent. The average annual percentage rate for credit cards was 15.38 percent. The math is compelling. Pay off your debts before you start saving, particularly if you have credit-card debt.

If having a financial cushion in your bank account makes you feel more secure, consider the extra credit available to you when you reduce your credit-card balance as your emergency fund until you’re debt-free and can start building a more substantial financial cushion.

7. Save For Retirement

The average length of retirement is 18 years. That’s an awful long time to be broke. Once you have taken care of your basic needs, saving for retirement should be at the top of your financial to-do list. Don’t rely on Social Security. If it’s still around by the time you retire, great, you just got yourself a bonus. However, it should not be your main source of retirement income.

A good rule of thumb is to save 15 percent of your household income in Roth IRA and pre-tax retirement funds. If you can keep saving at that rate for 35 years, you should – assuming an 8 percent return on your investment — be able to live your golden years on 80 percent of your pre-retirement income.

8. Protect Your Credit Score

Important Personal Finance

A good credit score is key to your financial health. You probably already know your credit score will determine whether your lease or loan application is approved and will influence what interest rate you’ll pay on your mortgage, credit cards and auto loans. However, that’s only part of it.

According to a 2012 study by the Society for Human Resources Management, nearly half of U.S. employers perform credit checks on job candidates. Insurance companies use your credit score to calculate your auto and renter’s insurance premiums. Even your love life is affected by your credit score. A 2013 survey by reported that 75 percent of women (57 percent of men) considered credit scores important when choosing a long-term partner.

You can find and compare a ton of credit reporting companies in our Super Money Reviews section.

9. Get Life Insurance

If you have dependents who would be affected financially by your death, you should obtain enough life insurance coverage to take care of their needs. If you’re single and without dependents, consider disability insurance to replace your source of income during prolonged illness.

Keep your investing and insurance separate. Whole life policies combine life insurance with an investment component that pays out cash once the insurance term ends. True. Knowing you will get some cash back at the end of your insurance’s term may help with the feeling you are throwing money away in an insurance you may never use. But there are better places to invest your money and the high cost of whole life policies could mean you end up buying less life insurance coverage than you need.

10. Plan for Taxes

Personal Finance Tips

Although we must all deal with it, tax planning is often the least understood component of personal finance. Granted, tax law can be complicated; and If you run a business or you’ve made important financial decisions this year, such as buying or selling a house, it may be a good idea to hire a professional to file your taxes. However, preparing your taxes doesn’t have to be that daunting.

Keep accurate records of both your income and deductible expenses. Reduce your chances of being audited by filling your return completely, correctly and on time.

Don’t give the government an interest-free loan. If you get a big tax refund every year, you’re paying too much, reduce the amount of taxes you withhold from your paycheck. On the other hand, don’t wait till the end of the year to pay your taxes. By the end of the year you should have paid 90 percent of your tax bill or you could face hefty underpayment penalties.

Personal Finance Isn’t Rocket Science

Learning about personal finance is not like learning about economics or business management. Sure, it helps to know the meaning of key financial terms and some basic math skills won’t hurt, but truly understanding personal finance goes much deeper than that. Understanding financial concepts is the easy part. Putting them in the practice is the real challenge. As Dave Ramsey, the financial author and nationally syndicated radio host, once said, “Personal finance is more personal than it is finance: it is more behavior than it is math.”

This article was written by staff writer Andrew Latham. His mission is to help fight your evil debt blob and get your personal finances in tip top shape.
Photos: Pinterest