Can I Rent-To-Own with Less-Than-Perfect Credit?

YES. Rent-To-Own agreements are designed to help people who have a history of credit trouble get the home they want and deserve. Knowing where you stand on your credit scores is key to getting started. Do you have good credit or not? Find out now!

Reviewing your credit reports illustrates your current situation and how far you have to go before you can secure a good mortgage rate that suits your needs. Improving your credit score is a process that is equal parts knowledge and action. Developing an understanding of how the credit system works gives you an exceptional leg up when it comes time to implement your game plan.

How Does Rent-To-Own Benefit People With Imperfect Credit?

Renting to own gives people with imperfect credit the opportunity to get started buying a home sooner, while living in the home they aim to purchase. When paired with targeted goal-setting and consistent work, Rent-To-Own gives buyers the opportunity to pay into an investment while they pay their rent, giving added incentive to get their credit in order. By automatically tucking extra cash into an escrow account, along with rent, you are putting money aside for a down payment that soon you consider part of the rent, allowing for budgeting that focuses on credit repair.

What is on a Credit Report?

Reading your credit report will give you clues as to where the weak points on your financial profile are and what you can do to start improving your scores today. Your report is an insider's view to what your creditors have to say about you. Credit reports are issued by the three major credit bureaus, and while their methods may vary slightly they include the same basic information in four categories. Those four categories are:

  1. Identifying information
  2. Trade lines, or credit accounts
  3. Credit inquires
  4. Public records

Each of these will have positive and negative information, called "items," listed. Identifying information includes your name, social security number, birthday, address and any other information needed to identify which unique consumer is being reported on. Credit accounts lists active credit accounts: credit cards, loans, mortgages, as well as a listing of late payments and items of that variety. The credit inquiries section lists the number of requests the credit bureau receives from creditors requesting reports, and is used as an indication of how often the individual is looking to open up new lines of credit. Credit bureaus also comb through public records, looking for red flags such as foreclosures, liens, suits, judgments and more that could indicate a potential risk to creditors.

Why Do I Have Bad Credit?

Bad credit can come from a variety of different issues. Everything from a series of late payments to a divorce or foreclosure can result in a lower credit score. Carrying substantial debt and/or pushing your outstanding debt towards your limit will also make you look like a risky investment. Reading through your credit report will give you a good idea of where you need to improve.

How Do I Improve My Credit?

Improving your credit requires time and persistence, but pays dividends in the long term. The centerpiece of repairing damaged credit is knowledge: the more you know about how credit works, the better you understand what benefits and what harms your reports. Some basics for improving your credit included paying down large debts, staying consistent paying bills on time, and keeping a close eye on your credit reports looking for questionable items and errors. For people who are serious about improving their credit and securing a mortgage for their Rent-To-Own property, speaking with a credit improvement specialist is a great way to establish goals and get started on the path to financial security.

How Is Bad Credit Affecting My Life?

Your credit score affects more things today than ever before. Your ability to secure a loan for a mortgage or car, as well as the interest rate you receive, centers on your credit score. Credit scores are used by utility companies to determine who needs to give a deposit for service, cell phone companies will charge extra for upgrades. In some cases, employers check the credit score of their prospective hires. A bad credit score can cost you more on interest or prevent you from securing loans you have the financial stability to handle.