How Becoming a Landlord Can Hurt Your Credit

March 6th, 2017 | Author:

[Y]ou often hear how landlords check your credit rating and a bad credit score can prevent you from renting a place. However, being a landlord can also harm your credit if you aren’t careful.

Your Property, Your Responsibility

Many people decide to rent out a room in their home or even convert a basement into an apartment. They may purchase a second property with the idea of renting out the first one instead of selling. All of these ideas can provide additional income and help pay the mortgage. However, you can’t rely solely on the income from the rental unit or you might end up in trouble.

If your tenant refuses to pay the rent, you are still responsible for making the mortgage payment. If you have multiple rental units with vacancy, this can become quite a financial burden. You don’t want to get behind on the payments or it will be reflected on your credit report since the mortgages are in your name.

How to Protect Yourself

You can do several things to protect your credit when renting out one or more properties that have a mortgage attached to them. First, make sure you can afford the payments even if you don’t have a tenant. Don’t take on more mortgage than you can afford with your own salary.

Second, check out any applicants who are interested in renting your property. You want to make sure they have a solid credit history of payment. If you are in doubt, reject the application or ask for a higher deposit.

Third, be aggressive about payments, but make sure you put your standard policy in writing. It take time to evict a nonpaying renter, so you want to take action early on and not be left with someone who refuses to pay the rent but still resides on the property.

Renting out your home or another property can be a great second income, but make sure it doesn’t ruin your credit. Protect your credit history by choosing the right tenant and communicating payment expectations and policies from the beginning.

Newest Answers

Credit Card Advice for New Graduates

June 26th, 2017 | Author:

[I]f you’ve recently graduated or plan to this summer, you may be planning to enter the world of being an adult. You’ll get a job, maybe an apartment and car, and probably open a bank account if you don’t already have one. You may also decide to get a credit card with your new income. […]

Continue Reading »

3 Reasons to Start Out a Marriage with Good Credit

June 23rd, 2017 | Author:

[W]ith summer comes plans for weddings, big beautiful bouquets, a gorgeous wedding dress, garden ceremony and many other unique plans. Of course, each of these items cost money, which can add up to thousands of dollars. What many couples fail to plan for as they dream of their wedding is how to start out marriage […]

Continue Reading »

Why the Employed Struggle to Survive

June 21st, 2017 | Author:

[E]ven those with full-time jobs often end up struggling to pay their bills and protect their credit rating. They live paycheck to paycheck with barely enough left over to last until the next payday. With reports of the economy improving and a low unemployment rate, this may not make sense. One theory is that shifting […]

Continue Reading »

How to Save Money on Vacation This Summer

June 19th, 2017 | Author:
h

[P]eople look forward to summertime partially because they have a vacation planned. It’s a chance to get away and take a break from the stresses of life. Unfortunately for those who live on a tight budget, coming back from vacation may be a dose of reality they would just as soon forget. You can imagine […]

Continue Reading »

Financial Steps to Take Before You Graduate

June 16th, 2017 | Author:
h

[I]f you’re about to graduate college and enter the workforce, you want to start out on the right foot. It’s all too easy to get caught up in the idea of a steady paycheck and make some bad financial decisions. Here are a few things you should do about your finances before you graduate. Think […]

Continue Reading »

How to Sell Stuff to Make Money

June 15th, 2017 | Author:
h

[Y]ou have a bill to pay and you don’t have the money. Or your car broke down and you don’t have the extra funds to pay for the repair. One way to come up with cash when you need it is to sell something you own. However, it’s not always as easy as it sounds. […]

Continue Reading »

Have You Become a Financial Adult?

June 9th, 2017 | Author:
h

[A]s a teenager and even college student, you probably had your parents looking out for you. They helped with expenses even if you had a part-time job. Now that you have entered adulthood with a full-time job, you feel like a grownup. But have you grown up financially? You Know How to Budget A person […]

Continue Reading »