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How muchcreditdo you better rent an apartment?
According to aYouTube videoby money expert Dave Ramsey from his call-in show, you dont need credit at all.
Ramseys 23-year-old caller was surprised.
The rest of the conversation isan essential lesson for anyone looking to build a credit history.
Busting the Credit Myth
Ramsey believes in doing his homework.
According to Ramsey, nine out of 10 will say yes.
Multiple reputable sources support Ramseys claim.
According to the credit bureau Experian, tenants without credit can land leases with otherwise strong applications.
Most importantly, you better earn enough to afford the rent easily.
The industry standard is for rent to be at most 30% of your monthly income.
Landlords may ask for more if you have no credit.
You might offer to pay several months rent at move-in or increase your security deposit.
Another option for credit-free tenants is to have someone co-sign your lease.
A co-signer agrees to pay your rent if you default.
Its a big ask, but it can make a difference with a hesitant landlord.
When You Might Need Credit
Ramsey is atireless advocatefor debt-free living.
This is an appealing policy, but its not always feasible for everyone.
Auto and Personal Loans
Ramseyadvises againstfinancing a car.
He encourages consumers to save up and buy a used car with cash.
Theoretically, if you keep saving what youd pay to a lender, youd eventually have enough to upgrade.
Mortgages
Many people can save up for a low-end used car.
There are other ways to buy a house without credit.
Some private lenders also accept alternative proof.
Still, its easier and often less costly to get a mortgage with a strong credit history.
The stronger, the better.
You want to avoid putting yourself in an endless cycle of borrowing, repaying and borrowing more.
But instead of buying everything with cash or debit, youll make select purchases with a credit card.
Youll then pay that card off at the end of the month.
Getting a credit card willhelp your credit scorein two major ways.
First, it gives you available credit in the form of your card limit.
Staying as far below that limit as possible when building credit is essential.Less credit useshows responsible borrowing.
Any remaining amount will accrue interest if you dont pay your entire balance by the due date.
Paying by the due date is essential.
Choose the Right Card
If youre new to the credit life, look for abeginner-friendly card option.
Most importantly, keep paying on time and dont carry a balance.
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