Some of those who are new to the housing process may be wondering whether a first time home buyers bad credit can be improved by renting for a while to potentially boost the person’s credit score, replacing any negative credit with a record of prompt rent payment. Knowing more about this issue will help young families and others make the best decisions about housing.
Does Your Rental Boost Your Credit Score?
The bottom line is that rental payments do not show up as positive credit ratings unless the landlord specifically reports these payments to a consumer credit agency. Because rental money is not often thought of as conventional debt, this often does not happen. That leaves the renter with the additional task of establishing good credit through car financing, personal loans or other means.
Utility Payments and Good Credit
Finance pros will counsel others about using utility payments like electric bills to boost a credit score. However, even this method is less than 100% effective. Utility payments will eventually build a good credit, but only in a certain sector of the credit rating system, meaning that while utility payments can be great for one person’s score, they may not be effective for another person.
Consumer advocates often stress the idea that it seems a bit unfair for those who are paying rent on time every month not to get some of the benefits of this responsible payment in terms of a higher and more established credit score. The fact is that a great number of people resort to taking out lines of credit in the form of personal credit cards to effectively build good credit that will show up in any credit check.