How to Build Your Credit Score While Renting

Ah, the joys of renting your first place — the excitement of independence, the thrill of choosing the perfect throw pillows, and the slight dread of that looming phrase: “credit score.” Yep, that pesky three-digit number plays a big role in adulting, from getting approved for your dream apartment to scoring favorable loan terms down the line.  

If you’re renting for the first time and your credit score is about as established as a baby giraffe learning to walk, don’t worry. There are practical steps you can take to build your credit score while renting.  

So, let’s dive into the nitty-gritty and start racking up those points! 

Why building your credit score matters 

Before we get to the how, let’s talk about the why. A solid credit score is your golden ticket to financial freedom. Whether you’re looking to buy a car, qualify for a mortgage, or even negotiate lower interest rates, a good credit score will open doors that a lackluster score will slam shut. And while renting doesn’t automatically impact your credit score the way paying a mortgage might, there are creative ways to leverage your rental situation to give your credit score a boost. Plus, if you plan to upgrade your digs in the future, a better credit score can help you qualify for that snazzy high-rise apartment with a pool. 

Tip #1: Use a rent reporting service 

Think of rent reporting services as the unsung heroes of the credit-building world. Normally, your rent payments don’t show up on your credit report, which is a total bummer because it’s likely your biggest monthly expense. But fear not! Using specialized services to report your on-time rent payments to the major credit bureaus can turn those monthly payments into brownie points for your credit score. 

Pro tip: Check with your landlord first. Some property management companies already use rent reporting services, so you might not have to do the heavy lifting. 

Tip #2: Pay your bills on time (every time) 

Late payments are like kryptonite for your credit score. Even if your rent payments don’t get reported, your other bills — like utilities, credit card payments, or that gym membership you forgot to cancel — definitely do. Set up autopay or reminders to ensure you’re never late. 

Pro tip: If you’re juggling multiple bills, a budgeting app can help you stay organized and avoid that dreaded “Oops, I forgot!” moment. 

Tip #3: Apply for a secured credit card 

If you don’t already have a credit card, a secured credit card is a fantastic way to start building credit. Unlike a traditional credit card, a secured card requires a refundable deposit (usually equal to your credit limit). Use it sparingly and responsibly — a small grocery run or a couple of streaming subscriptions — and make sure to pay off the balance in full every month. Voila, you’re building credit while keeping your debt in check. 

Pro tip: Keep your credit utilization below 30%. For example, if your secured credit card has a $500 limit, aim to use less than $150 of it. 

Tip #4: Get a credit-builder loan 

Another clever option for first-timers is a credit-builder loan. These are small, short-term loans designed to help you establish credit. The kicker? You don’t get the loan amount upfront. Instead, the lender holds it in a savings account while you make monthly payments. Once the loan is paid off, you get the money (plus a better credit score). It’s like forced savings with a bonus perk. 

Pro tip: Check with your local credit union or online lenders for credit-builder loan options. 

Tip #5: Keep tabs on your credit report 

You wouldn’t go months without checking your bank account (we hope), so why ignore your credit report? Regularly monitoring your credit report can help you spot errors or suspicious activity that could be dragging your score down. To do that, use specialized websites that allow you to check your report for free from each major bureau once a year. 

Pro tip: Look out for mistakes like accounts you didn’t open or incorrect payment statuses. If possible, dispute errors promptly. 

Tip #6: Ask for help if needed 

If your credit score is struggling to find its groove, consider asking a trusted family member to add you as an authorized user on their credit card. This doesn’t mean you need to use the card — just being associated with their account (assuming they have good credit habits) can give your score a little nudge in the right direction. 

Pro tip: Make sure the primary cardholder’s credit card issuer reports authorized users to the credit bureaus. 

Remember, good credit isn’t just about the numbers; it’s about creating opportunities for your future. So go ahead, tackle this challenge with gusto, and watch your financial life flourish. After all, the best part about building your credit score is knowing you’re laying the foundation for a bright (and debt-friendly) future.