Students: The Importance of a Good Credit Score

Monday, March 22, 2021

Blog Image

A credit score is a statistical number, determined by a person’s credit history, that predicts how financially trustworthy the person will be with credit in the future. A good credit score is important because lenders use it to determine whether they want to loan money to a person. Landlords and property managers also use it to pre-screen rental applicants. Lease approvals, mortgages, car loans and credit cards are just a few vital things that can be affected by a bad credit score.

 

When it comes to off-campus housing, students should be aware of how their credit history or lack of one can affect renting a place, as well as the different avenues available to begin building a good credit score while in college or university.

 

Co-signers/Guarantors

Students who haven’t begun building a credit history will normally have the option to provide a co-signer/rental guarantor to sign the lease with them. This means that another person has agreed to also be legally responsible for the rental unit, any damages, and the lease payments. Often a co-signer/guarantor will be a parent, guardian, family member or close friend of the student.

 

Explore Options

Some larger rental communities and property management companies are obligated by their head office to obtain certain credit criteria when selecting new tenants. Because of this, it can sometimes be difficult for students without rental experience to rent an apartment from these corporations. In this case, the student may be better to apply for housing with a private landlord instead. Local landlords offering a room or attached unit for rent will usually have less strict pre-screening rules to follow and be understanding that student renters haven’t built their credit score yet.

 

Character References

Students who do not have any rental history or a credit score for a lease application can provide character references instead. Students can compile character references from teachers, coaches, previous jobs, delivering newspapers, etc. and can be given in a letter format or list for the potential landlord to contact. Some landlords may still require a co-signer/guarantor in addition to character references.

 

Build a Good Credit Score!

While attending college or university, it’s a perfect time for students to begin building their credit score. One way to start is by getting a student credit card with a very small credit limit and using it to pay for groceries or minor expenses. It’s very important to make payments on time and be mindful of paying the amount owed regularly. Another option is by ask the landlord to use a rental payment company and report each rental payment you make to the credit bureau monthly. This helps to establish good credit with punctual payments while being a student.

 

Are you curious about your current credit score? Use a free service like Credit Karma to check your credit without hurting your score!

 

SEE ALSO:  First Time Renters: 10 Things Nobody Tells You



The Places4Students.com Team