Ernst & Haas Management Co Blog

 Like most other property management firms, Ernst & Haas has its own set of criteria that applicants must meet in order to become one of our tenants. In addition to an applicant having no evictions on their rental history, and their monthly income being two-and-a-half times the monthly rent, we also ask that their credit score be at least 580 in order for their application to be considered. Unfortunately, it's very common for an applicant that has a clean rental record and a decent monthly income to not qualify due to low credit. "But I don't understand, I pay my bills on time!" and "I don't have high balances on my credit cards! Why is my credit so low?" are common reactions we receive here at the office. According to www.bankrate.com, most people are well aware that items such as bankruptcies, foreclosures, and late and missed payments are some major ways to lower a person's credit score. But most people aren't aware of the less dramatic items that can scare lenders - and lower one's credit. Here are 6 small, but very influential items that can affect your credit greatly: 1. Multiplying Lines of Credit: Opening one new card is normal. Opening three in a short amount of time, however, could signal something bad is going on in your financial life. The one thing issuers don't want to see is that you're asking everyone in town to lend you money. 2. A Housing Short Sale: "People are told short sales won't hurt their credit, said Maxine Sweet, vice president of public education for credit bureau Experian. "But there is no such thing as a 'short sale' in terms of how the sale is reported to us. The way the account is closed out is that it is settled for a lesser amount than you agreed to pay originally. The status is 'settled' and it's just as negative as a foreclosure." It's advised that you negotiate so the lender doesn't report the difference between your mortgage and what you repaid as "balance owed" on your credit report. Your credit score will take a hit, but this action will help soften the blow. 3. Someone Else's Debt: Here's something you might not know - when you co-sign to help someone else get a loan or credit card, that entire debt goes on your credit report. While the fact you've co-signed is neither good nor bad, it does mean that as far as the lender is concerned, you're carrying that debt yourself. And it will be included in your existing debt load when you apply for a home mortgage, credit card, or any other form of credit. Oh, and if that person  you co-signed for stops paying, pays late, or misses payments, that bad behavior will likely show up on your credit report. 4. Minimum Payment: While creditors make money when you carry a balance, lenders who view your credit report don't like to see you paying just the minimums. Paying minimums month after month suggests you're under financial stress and that you can't pay off the full balance. Your current and future lenders will see that as a giant red stop sign when it comes to granting additional credit. 5. A Lot of Inquiries: This is similar to soliciting a lot of new credit. When lending standards tightened, a lot of borrowers, especially subprime borrowers, were having trouble getting credit. That meant they had to apply multiple times to try and get what they wanted. Every time you allow a potential lender to pull your credit report, your score can take a small hit. The exact impact varies with the consumer, the score, and the number of inquiries. 6. Cash Advances: Cash advances in many cases indicate desperation. Usually, people don't take out cash advances against a credit card because they want money sitting in the bank. Cash advances hurt in two major ways: First, the cash advance is immediately added to your debt balance, which lowers your available credit and can lower your credit score. Second, large card issuers regularly re-evaluate their customer's behavior, meaning they pull your credit report, the FICO score, and your account history. And obviously your account history will show any cash advances and could potential affect your current standing with any given lender. Protecting your credit and keeping your credit at a decent score may seem impossible, but it's worth trying because once you put a dent in your score, it's like trying to glue together a shattered China plate - it will never be the same again. Be responsible with your money and your credit usage and you'll be on the right track!