Did you know that general-purpose FICO scores (credit scores) didn't become relevant until 1989? It's true! While everyone wants to have a high credit score now, this wasn't always a factor when it came to renting and getting loans.
Nowadays, a decent credit score is crucial unless you have a very impressive bank account or a reliable co-signer. It's time to learn how to better your credit so you can be more independent. If you need to rent a home or get a loan, your credit score matters!
But how do you go about building credit? Let's talk about it. Read on to learn how to build credit in 2022.
1. Keep Credit Usage to 30% (or Less)
When you get a credit card, it's tempting to start spending more money. It's also hard to keep track of your spending if you aren't frequently keeping up with your credit purchases online.
While you should be using your credit card, you should try to keep your spending around 30% or less of your total limit. Many people recommend bringing it below 10%.
Potential lenders want to see that you're able to pay your debts. By overspending, not only are you lowering your ability to repay your credit card balance, but you're showing a perceived need to rely on credit for purchases.
Make sure that you're paying your bill in full each month, or at last down to that 30% or less.
2. Avoid Hard Inquiries
There are two ways to check a credit score: hard inquiries and soft inquiries.
Soft inquiries are ideal. That's what happens when you check your own credit score or allow an employer to look at your credit score. This is also how banks and credit card companies check your credit to decide if they want to send you an offer for a pre-approved card.
These inquiries do nothing to your credit score. It's good for you to check your own credit score from time to time so you can track it. When applying for a property at Cissell Management Company, our credit check is a soft inquiry so you do not have to worry about it damaging your credit.
A hard inquiry happens when you try to open a new line of credit, like taking out an auto loan or applying for a mortgage. While these things are necessary sometimes, you should limit them.
Hard inquiries can damage your credit score for up to several years. One or two is okay (again, they can be unavoidable, and those new lines of credit will help you continue building more credit), and they may make lenders think that you're a financial risk.
3. Consider Consolidating Your Debts
If you're in debt and you have multiple debts to pay, consolidating might be the best option for your credit score.
You'll have to take out a debt consolidation loan. While this may seem like a bad thing for your credit score, it may allow you to lower your interest and pay your debts off more quickly (which will improve your credit score over time).
4. Use Local Credit Counseling and Housing Resources
We have great resources local to the Oxford and North Mississippi area to help you improve your credit and secure housing.
LOU-HOME (Lafayette, Oxford and University Home Ownership Management Enterprise) is a non-profit, non-partisan organization whose goal is to advance affordable housing opportunities within our local community. The organization was founded in 2006 with the initial goal of bringing county, city and University leadership together to save and refurbish on-campus faculty housing which the University sought to donate and turn into affordable housing.
Since the success of that project, the LOU-HOME team has dedicated itself to advocating for any effort that will help provide homes for the many people in our community who struggle with housing insecurity. This work includes helping to develop Belle Rivers — a modern, affordable housing neighborhood in our community — and providing housing and credit counseling to clients throughout Lafayette County.
LOU-HOME also serves as a community resource for residents, city and county officials, developers, businesses and non-profits, providing resources and research related to affordable housing and housing and rental rights, while creating space for discussion about this important issue that affects us all.
Cissell Management Company has worked with many of the team at LOU-HOME in the past. They are all passionate people who care deeply about helping you secure housing in the Lafayette County, Oxford and University area.
Southern Bancorp is another great resource for residents in North Mississippi who want to improve their credit and learn about savings. A different kind of bank — from their mission to their markets, Southern Bancorp is a unique financial institution that was founded to help strengthen underserved communities through financial access and investment. By combining traditional banking and lending services with financial development tools ranging from credit counseling to public policy advocacy, Southern Bancorp helps underserved families and communities grow financially stronger — regardless of zip code.
The mission of Southern Bancorp is to create economic opportunity in rural and underserved communities by providing responsible and responsive financial products and services that balance profits with purpose.
Take a look at Southern Bancorp's Opportunity Center for help with improving your credit, budgeting, taxes, and more!
5. Rent from Cissell Management Company
At Cissell Management Company, we hope to make your life easier. One way we do this is by helping our current residents improve their credit. Not only will this help with future rental applications or purchasing a home, improving your credit can save you money by lowering the interest rate on car loans, personal loans, and credit cards.
An advantage of renting from Cissell Management Company is our Resident Benefits Package. We're the only company in town to provide such a package. A perk of this package is that each resident's rent payments are reported to Transunion and Equifax. On-time rent payments can raise your credit score by as much as 20 points!
Learn How to Better Your Credit With These Tips
Figuring out how to better your credit is hard when you're first getting started. With these tips and the help from a local bank or credit union, you'll be well on your way to a perfect credit score that you can be proud of.
Are you looking for the perfect home to rent while you build your credit? At Cissel Management Company, we want to help! Check out our current rental listings to find your match today.