Renting as a Way to Strengthen Your Credit Report

Your dream is to buy a house, but all you can afford to do now is rent. You're wondering if renting can actually help you attain your goal of owning your first home. The answer is a definite yes, if you use the time you rent to build up your credit report and improve your finances so you can qualify for the best mortgage rates.

Paying your rent on time every month certainly helps to prove to a mortgage banker that you will pay your bills on time, especially your mortgage. In today's market that's a big step forward.

You also can use your time as a renter to improve your chances of getting an even better deal by taking a number of key steps while you're renting:

Step 1: Repair Your Credit Report, if Necessary

Get a copy your credit report from each of the three credit reporting agencies, Equifax, Experian and TransUnion. Review all three reports and check for any errors, such as accounts that are not yours, late payments that are not accurate, credit limits that are not right or anything else that may be shown in error.

At the end of the report you'll get a page that allows you to report any errors. Follow the instructions for correcting any errors with each of the credit reporting agencies. Once the credit reporting agency has corrected the errors, it will send you a corrected report. Check it to be sure all the information is now correct. If not, repeat the process. This can be frustrating and take a few tries, but it will be worth it in the end if it improves your credit score and helps you get a better mortgage deal.

Fixing errors on your credit report can take months to do, so start work on it right away. The sooner you repair your credit report, the faster your credit score will start improving.