A large percentage of American citizens have credit scores that are lower than they’d like them to be. This can prevent them from applying for loans, credit cards, insurance, apartments, and many other important things.
The process of raising a credit score once it’s been damaged can seem extremely difficult. Some people try paying off credit cards to slowly increase their score while others work on establishing a lengthy history. No matter what method they use, it’ll require patience and plenty of time.
If your score has been damaged or if you lack a credit history, you might want to consider renting a home with the intention to own. Doing so can seriously help your credit score due to the following reasons.
It Gives You Time to Build a Reputable Score
Sometimes, all you need to improve your score is time. The more months you effectively rent a home and pay off your bills, the more your credit score will improve. By renting to own a home, you are giving yourself the time to gradually improve your score while still living in the house you hope to own one day. If you don’t have much of a credit history, the time spent renting a home will allow one to develop. Once your credit score is high enough, you’ll be able to apply for a loan to officially own the home.
Paying Rent Indicates You’re a Reliable Credit User
Just like with an apartment, you’ll be raising your score by signing a rental agreement and sticking to its terms. The credit unions, as well as banks and other companies, want to see that you can reliably make your payments month after month. Think of your rent-to-own home as a test that will prove your score should be higher and that you can be trusted.
You’re Working Towards Applying for a Mortgage
In order to obtain a loan for a house, most places will require you to have a credit score of 640 in order to qualify. Because a rent-to-own home will encourage you to eventually apply for a mortgage and stop renting your living space, you’ll be driven to pull your score up as much as possible. This incentive will probably speed up your progress and get you to the financial standpoint you want to be at.