From the outside, the rows of tile-roof houses in a new community in Menifee don’t look much different from those in other subdivisions cropping up in this fast-growing city in Riverside County. But on the inside, these all-electric homes are revolutionary, offering a glimpse of the zero-emission future we should be hurtling toward to fight climate change and adapt to its effects.
All the houses in the Durango and Oak Shade at Shadow Mountain communities, two adjacent KB Home subdivisions I visited in May for an opening event, were built without natural gas hookups or appliances. Each of the 219 homes comes with rooftop solar panels, heat pumps for heating and cooling, induction cooktops and other energy-efficient electric appliances, and a smart electrical panel that manages energy use. In the garage is a battery storage system that can power the home during an outage and in the evenings when the cost of electricity from the grid is higher.
They’ll also soon be connected to a shared community battery storage facility the size of a shipping container that’s a backbone of a system known as a microgrid. It will allow residents to disconnect from the electrical grid during an outage, and use the backup power to keep their lights on for a few days.
I expected these homes to come with a premium price tag, given their futuristic amenities. But they start around $520,000, and a 2,900-square foot, four-bedroom, two-bath Spanish-style home recently sold for about $590,000. Buyers aren’t paying extra for technology that would otherwise cost $30,000, according to the homebuilder, because the project was subsidized by a $6.65 million U.S. Department of Energy grant.
The homes have other energy efficiency features such as spray foam insulation under the roof to help cool the attic and the living space below. The houses are essentially “like a Yeti cooler,” as one official with SunPower, the company that provided their solar and battery-storage systems, told me. That’s life changing in this corner of Riverside County where summer days often exceed 100 degrees and utility bills climb painfully high.
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After spending a few hours checking out the homes’ energy-smart features and listening to company and government officials talk up their climate-friendliness and resilience, I was almost envious. The people moving into these houses are living in a world that, for now, remains a distant reality for most Californians for whom a fossil fuel-free home is still very much a pipe dream. And it highlighted how much work there is yet to do by state officials to ensure all Californians start to benefit from home electrification as that need becomes increasingly obvious in a world altered by climate change.
Underscoring that feeling for me was a remark by a California Energy Commission official in attendance, who noted that new construction accounts for less than 1% of the state’s housing stock in any given year.
California has 14 million homes and builds only about 110,000 new housing units a year. So even if all new homes are built with at least one electric heat pump, as the Energy Commission expects, that would account for only about 8% of all homes by 2030, 14% by 2040, and 20% by 2050. That’s not anywhere near fast enough to slash climate-warming emissions, which means that most of this transition will have to happen by replacing appliances in existing homes.
For now, California remains heavily dependent on fossil fuel in daily life, especially the methane gas that powers the majority of home appliances. For most of us, the transition to zero-emission electric living will be far more complicated, messy and slow than buying a new home.
The furnaces, stoves, clothes dryers and water heaters in our homes and businesses may not seem like big polluters individually, but they all add up to a lot. Buildings are one of the biggest emissions sources in California, responsible for about 25% of its climate pollution. But California still lacks the kind of straightforward zero-emission targets for buildings that it has already adopted for other major pollution sources like electricity generation and new cars.
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Because home appliances like furnaces and water heaters can last 15 years or longer, scaling up action over the next few years is critical if we are to get on a path to zero out greenhouse gas emissions by midcentury and avert catastrophic levels of climate change.
A recent report by Rewiring America, an electrification-focused nonprofit organization, found that to meet those climate targets the U.S. has to dramatically increase the pace of replacing fossil-fueled appliances and cars over the next three years. That would mean purchasing about 14 million more electric heat pumps, water heaters, stoves, rooftop solar systems and electric vehicles above what’s expected.
While California has some laudable goals, including Gov. Gavin Newsom’s target of installing 6 million heat pumps by 2030, state officials acknowledge that much greater numbers will be needed to put California on track to achieving a carbon-neutral economy by 2045.
State air quality regulators plan to end the sale of new gas-fueled furnaces and water heaters by 2030, and the Inflation Reduction Act and its array of consumer rebate and incentive programs should help bring down the cost of replacing them with electric heat pump models. But state leaders need to establish clear and ambitious targets for home electrification, while pursuing creative solutions such as establishing a neighborhood decarbonization programto retrofit entire low-income communities with electric appliances and infrastructure at the same time.
There are reasons for optimism, including the home construction industry’s embrace of electric technology. Heat pumps are doing particularly well, now accounting for more than 50% of the market in new construction.
But I’ve also encountered troubling stories that make me really concerned about the slow and uneven pace of change. I’ve heard from homeowners struggling to turn their houses all-electric and their travails through a thicket of contractor resistance, government red tape and other obstacles. I’ve spoken to community leaders who fear that low-income tenants and other disadvantaged groups will end up shouldering most of the burdens of electrification, like higher utility bills and rent increases landlords are likely to impose to pay for electrical upgrades. I’ve covered legal setbacks and fossil fuel industry resistance operations that are hindering the transition to healthier, gas-free homes.
At my family’s 1950s-era tract house, I want to replace the gas water heater, furnace, dryer and stove with heat pump and induction models as soon as we can afford to. But I know that will be a long, expensive journey with no shortage of complications — and electrical work.
For now, our entry point is a $100 countertop induction cooktop we’ve started to use instead of our gas burners. It boils water faster and doesn’t pollute the air, but draws so much electricity that we can’t turn on other kitchen appliances at the same time or it overloads the circuit.
Whether we rent or own or have a new or historic home, everyone should be able to live in an efficient, non-polluting and climate-ready dwelling even if it wasn’t purpose-built for an all-electric world like the new construction in Menifee. None of us should have to wait decades for that to be our reality too.
The bill is a way for legislators to limit these investors’ gains when buying and renting homes, which they claim has driven up local housing prices and rents. According to the legislators, the U.S. faces a shortage of 3.8 million homes, and potential homeowners are unable to find properties they can afford.
The effort is being led by Senate members Sherrod Brown (D-OH), the chair of the Senate Banking, Housing, and Urban Affairs Committee, and Ron Wyden (D-OR), the chair of the Senate Finance Committee. It also includes Senators Tina Smith (D-MN), Jeff Merkley (D-OR), Jack Reed (D-RI), John Fetterman (D-PA), Elizabeth Warren (D-MA), and Tammy Baldwin (D-WI).
The new bill would allow owners to continue taking deductions on properties financed using Low-Income Housing Tax Credits (LIHTC) that are still in their affordability period, and on build-for-rent single-family housing.
The bill, an amendment to the Internal Revenue Code of 1986, would not disallow deductions for single-family rental homes purchased before enactment.
One example given by the legislators to introduce the bill is Ohio. They say two big investors own more than 12,000 homes in just three Ohio markets. Meanwhile, other investors don’t report how many homes they own.
“In too many communities in Ohio, big investors funded by Wall Street buy up homes that could have gone to first-time homebuyers, then jack up the rent, neglect repairs, and threaten families with eviction,” said Senator Brown in a statement. “Our bill will help prevent corporate landlords from driving up local housing prices and put power back in the hands of working families, who need a safe, affordable place to live and raise their children.”
Housing trade groups, including the National Association of Local Housing Finance Agencies (NALHFA), supported the bill.
“This legislation represents a critical step in safeguarding the long-term affordability and stability of our communities, empowering local governments to protect single-family affordable housing stock, and preserve the well-being of low-income individuals and families,” Jonathan Paine, NALHFA executive director, said in a statement.
Groups supporting the bill recognize that small investors own a large number of rental homes. However, according to these groups, large institutional investors increased their purchases at the height of the pandemic and have continued to purchase a significant share of single-family homes.
Moreover, these big investors are under scrutiny by Congress, accused of gentrifying minority neighborhoods and allegedly displacing large numbers of people of color — Black residents in particular.
Read more: What’s to blame for the office market’s descent? Blackstone, a leading global investment firm, has already invested roughly €3.5 billion ($3.8 billion) in Europe this year, according to Bloomberg. McCarthy explained that its focus lies on properties with strong potential for rental growth to offset higher borrowing costs. Sectors such as warehouses, student … [Read more…]
Residential properties are pictured in an aerial view on June 26, 2023 in Enfield, England. According to data from the Financial Conduct Authority, borrowers in the London Borough of Enfield have the biggest mortgages relative to their income in the U.K.
Carl Court | Getty Images News | Getty Images
A key U.K. mortgage rate on Tuesday climbed to its highest level for 15 years, surpassing levels reached in the aftermath of September’s “mini-budget” crisis and deepening fears of a catastrophe for struggling homeowners.
The average rate of a two-year fixed deal now stands at 6.66%, according to figures from data provider Moneyfacts, a modest increase from Monday. It means mortgage costs are now at their highest level since August 2008 during the global financial crisis.
The 2-year rate hit 6.65% on Oct. 20 last year, shortly after former Finance Minister Kwasi Kwarteng’s package of unfunded tax cuts sparked chaos in the mortgage market and threatened to topple pension funds.
The average 5-year mortgage rate rose to 6.17% on Tuesday, Moneyfacts said, a marginal increase from Monday but still some way off the 6.51% level reached on Oct. 20.
U.K. mortgage costs, which had staged a recovery in the months following the “mini-budget” crisis, have soared recently following 13 consecutive rate hikes by the Bank of England.
Most recently, the central bank increased rates by 50 basis points to 5%, a bigger increase than many had expected. The surprise move will affect millions of homeowners as the interest rates on many mortgages in the U.K. are directly linked to the central bank’s base rate.
Renters, too, are likely to see their payments increase as buy-to-let landlords pass on higher mortgage repayments.
It comes as the Bank of England battles stubbornly high inflation, with Governor Andrew Bailey reportedly saying on Monday that the central must “see the job through” on bringing down prices.
Many believe further interest rate hikes are inevitable in the coming months.
‘Mood music is changing’
“Markets expect interest rates to go higher, mortgage payers are marching towards fixed rate renewal dates with a sense of dread, and employers are nervous,” Danni Hewson, head of financial analysis at AJ Bell, said Tuesday.
“The mood music is changing and pretty soon bad news won’t be in the lining of good news, it will just be bad news,” she added.
British homebuyers tend to take out mortgages that have a fixed rate for two or five years. When the duration is up, they either move to a new fixed rate or accept a variable rate.
Research by the National Institute of Economic and Social Research, a leading independent think tank, recently estimated that the Bank of England’s 50-basis-point hike last month would see 1.2 million U.K. households (4% of households nationwide) run out of savings by the end of the year because of higher mortgage repayments.
That would take the proportion of insolvent households to nearly 30% (roughly 7.8 million), the NIESR said, with the largest impact set to be incurred in Wales and the northeast of England.
‘Further misery on mortgage holders’
Matthew Ryan, head of market strategy at global financial services firm Ebury, said Tuesday that financial markets were pricing in a peak in U.K. interest rates of around 6.35% in the first three months of 2024, up from 5% currently.
This “would surely make the BoE the most hawkish major central bank in the world between now and then,” Ryan said.
“We think that markets are slightly ahead of themselves, although we do expect another 50 basis point hike from the [Monetary Policy Committee] in August, with a real risk that the base rate tops out above 6%.”
He said this is “set to heap further misery on mortgage holders, particularly as 700,000 fixed term contracts are set to expire in the second half of 2023 alone.”
“We suspect that higher mortgage rates will contribute to weaker economic activity in early-2024, and we are now not ruling out a technical recession in the first half of next year,” Ryan added.
When the time comes to find a new apartment, searching for the right place at the right price can take up a good deal of your free time. With millions of rental properties across the U.S. to choose from, how do apartment seekers know they’re finding the best options out there from the sheer number available? You may fear missing out on good options just because you don’t know the best places to look for apartments.
But, if you know the right places to search for apartments, you will find the cream of the crop.
Where to look for apartment listings, from rental websites to word of mouth
Thanks to the convenience and accessibility of the internet, you can search for your next apartment anytime, anywhere. But, there are plenty of other excellent places to look for apartments that fit your price range and lifestyle.
Internet search
Nowadays, the internet is our go-to for pretty much everything. That makes it the best place to look for apartments.
Using any internet search engine, do a keyword search for “apartments in [your city].” Add descriptors like the size of the unit or amenities like pet-friendliness or having air conditioning.
Use the search filters to look for the most updated listings, and voila! Scroll through the search results to see what catches your eye and branch out from there.
Apartment rental sites like Rent.
Apart from a straightforward internet search, using apartment search sites like Rent. is one of the best tools in the apartment hunters’ arsenal. These easy-to-use sites show renters tons of rental options within a certain area, with customizable options to hone your search.
Starting with the home page, type in the name of the city or place you’re looking to rent. The site directs you to a listing page full of available apartments and units. As landlords and property managers can post listings directly, you have easy, instant access to hundreds of units all in one place.
The best rental websites also have map views for more precise apartment hunting. The map view feature allows you to zoom in or out to focus on specific areas or expand your search radius.
But, the apartment finder site often has hundreds of units to scroll through. How do you hone your search? On a banner near the top of the page, you’ll find multiple-choice fields. These allow you to customize your search. You can look for apartments by price range, unit size, square footage or amenities. You can also search by disability access or income-restricted housing.
Highlighting the amenities that are the most important to you is one of the best ways to weed out undesirable apartments or focus on luxury properties. For pet owners in search of dog-or-cat-friendly units, there’s an option for that. You can also search by whether or not it includes utilities, if units come with air conditioning or if the complex has parking. Once you update the search filters with your filtered options, you can do price comparisons and compare the best features.
Apartment search mobile apps
If you’re always out and about, many apartment finder websites now have rental apps, allowing you to search for apartments on the go.
Simply download the app, put in your search criteria and let the hunt continue no matter where you are.
Community gathering places
Go analog by checking the notice boards at community spaces. Libraries, gyms, parks, grocery stores and other gathering places often have notice boards for local events, businesses and even available apartments. Smaller landlords in your community sometimes post adverts looking for new tenants. This is also a great way to find short-term rentals.
If you’re in a new city, searching these boards is another way to learn more about your new home and connect with the community.
Real estate websites
Real estate websites aren’t just for buying anymore. Many now have separate sections for rentals, offering similar customizable search features.
Since lots of people don’t realize they can look for apartment rentals on a real estate website, that gives you an edge. You may find that the site offers new listings unavailable elsewhere online, giving you a step up in applying first.
Online neighborhood groups
If you’re seeking rentals within a specific neighborhood, see if the area has an online group you can join. Social media sites like Facebook have neighborhood community groups where residents can interact.
Whether you’re new to the area or a long-term local, add a post asking if there are any available apartment rentals. Just be sure to not give away too much personal information.
Property management companies
Large management companies often have their own website where they share available listings in their buildings. If there’s a particular operator you’re interested in renting from, go to the managing company’s website to see if they have anything posted.
Apartment complex websites
If there’s a particular apartment complex you’re interested in living in, you can look directly at their website, as well. Along with photos and information about the unit size and square footage, the listings will include how much rent is for different-sized apartments.
Newer apartment buildings will often have multiple units available and sometimes, have special deals to celebrate their opening.
Ask your landlord or property manager
If you’re happy with your current landlord and living situation but are looking to upgrade your apartment size, ask the landlord or property manager if they have any other units available.
Sometimes, landlords and property managers own or operate multiple apartment buildings. If you’ve had a good experience renting from them in your current unit, ask if they have similar apartments or other buildings you can look at.
Rental brokers
Like a real estate broker, a rental broker holds your hand and guides you through the apartment search process. Taking your list of requirements, they look through all the available search options to bring you a curated list. They can direct you to listings you may otherwise have missed, narrow down your options and ultimately help you save money.
With them doing all the grunt work, working with a rental broker is also useful if you’re in a time crunch or moving from far away and can only do video tours.
Unlike real estate brokers, though, rental brokers can earn compensation from landlords or management companies for bringing them new tenants in the form of referral fees. If the broker comes well-recommended, you’ll know that they only partner with respectable, top-quality landlords.
Ask friends and family
Who can you trust more to give you honest advice or feedback than your loved ones?
Whether you’re moving cities or moving neighborhoods, ask family and friends in the area if they know of any apartments available for rent. You trust their word and they can direct you to some good finds.
Tour prospective neighborhoods
If you have a specific neighborhood in mind you’d like to live in, scope it out in person to see if you find any “For Rent” signs. Exploring a neighborhood in person also gives you a better sense if you’ll be happy there or not. You can also check if it has all the amenities you need like nearby schools or public transportation.
Reading neighborhood guides in magazines and websites will also give you a good sense of what the area has to offer. These informational guides give you an overview of the area, with practical information, such as its walk score and if public transit is nearby. But, it’ll also list fun benefits of living in the area, like cool restaurants, stores and neighborhood activities.
What to look for in a new apartment
Every renter’s needs are different, so what exactly you need in an apartment varies by person. But there are some things all worthwhile apartments should have in common. You don’t want to pay rent for a unit that’s in bad condition or unsafe to live in.
Here’s what to look for in each apartment you visit during your search:
The entire unit is clean and in good condition, with no mold, mildew, water stains, peeling wallpaper or other signs of neglect
The appliances function properly (stove, fridge, oven, etc.)
Water runs properly in the showers, sinks and toilets, and hot and cold water options work
The electrical outlets work
All doors and windows properly close and lock
Functional heater and AC
Check for signs of rodent infestation like chew marks or droppings
How to stay organized during your apartment search
As you look through all the apartment search sites during your apartment hunt, you need to keep track of all the rental listings you like. Otherwise, you could forget where you found that one listing that was just right and miss out on applying in time.
As you find apartments that catch your eye, save listings in your bookmark tab. You can also organize them in a spreadsheet or word document with direct links for easy access.
This can also help you weed out duplicate listings if landlords list properties in multiple places, as well as share your finds with your roommates or live-in partners.
When should you start looking for your next apartment?
It’s a good rule of thumb to start your apartment search one to two months before your expected move-in date.
There are several reasons for this. First, you’ll need to give notice that you’re leaving your current apartment. Some landlords require that you give notice 30 days before vacating, others require 60 days. Check the terms of your lease agreement to know exactly when you need to notify your landlord that you’re leaving.
Secondly, you don’t want to start your apartment search too soon. If you find a unit you like but your move-in date is too far away, the landlord may not hold the apartment for you. A couple of months gives you ample time to search and apply for your new home.
Be prepared when you find the best apartment for you
Good, well-priced apartments go fast in today’s competitive rental market. As you’re searching for your new apartment, it’s a good idea to have all the documents and information you need to apply ready to go. That way, as soon as you find an apartment you like, you can apply instantly and start the process.
Using the best apartment rental sites gives you an edge in the apartment hunt
Giving you the most listings in rental markets all over America, Rent. helps you find the best apartment for you with ease.
U.K. homeowners and would-be buyers have been beset by rising borrowing costs over the past year as the Bank of England has sought to get a handle on stubbornly high inflation.
Anadolu Agency | Anadolu Agency | Getty Images
LONDON — U.K. house prices fell at their fastest annual pace in 12 years in June as still escalating mortgage costs piled further pressure on the property market.
Property prices slumped 2.6% in the year to June, their biggest decline since June 2011 and a sharp increase on the 1.1% annual drop recorded in May, according to mortgage lender Halifax’s latest price index released Friday.
Prices were down for the third consecutive month, slipping 0.1% since May. The average U.K. property now costs £285,932 (£364,490), down from a peak of £293,992 in August 2022.
Kim Kinnaird, director at Halifax Mortgages, said the annual decline belies a slight recovery in prices this year following the cataclysmic fallout from the U.K.’s “mini budget” in October, which saw mortgage rates soar and property prices plummet.
“Average house prices are actually up by +1.5% (£4,000) so far this year, with most of that growth coming in the first quarter, following the sharp fall in prices we saw at the end of last year,” she said.
However, she added that “the housing market remains sensitive to volatility in borrowing costs.”
House prices have ‘further to fall’
Homeowners and would-be buyers have been beset by rising borrowing costs over the past year as the Bank of England has sought to get a handle on stubbornly high inflation.
The BOE raised interest rates for the 13th consecutive time in June, hiking by a surprise 50 basis points and taking the base rate to 5%. It came as U.K. core inflation rose month-on-month in May.
Lofty inflation and higher benchmark bank rates have pushed up U.K. sovereign gilt yields, which are used to price mortgages, prompting some lenders to increase rates or pull certain products all together.
The summer is likely to see price cuts become even more widespread, and we may well see house prices fall more significantly.
Sarah Coles
head of personal finance at Hargreaves Lansdowne
Sarah Coles, head of personal finance at Hargreaves Lansdowne, said the latest rate hike was not fully reflected in Friday’s housing data, likely spelling more pain ahead for borrowers.
“Two-year fixed rates started June just under 5.5% and five-year deals at 5.1%, according to Moneyfacts, and they ended the month at 6.4% and just shy of 6% respectively. All eyes will be on just how much damage may be done when new rates feed through into the figures,” Coles told CNBC.
Higher mortgage rates look set to add further downward pressure to the housing market, she added, with prices on track to fall further this summer.
Higher mortgage rates look set to add further downward pressure to the housing market in the U.K.
Nathan Stirk | Getty Images News | Getty Images
“Sellers have already started cutting prices to shift their properties. Zoopla figures showed one in 20 made a cut in May, averaging 9%. The summer is likely to see price cuts become even more widespread, and we may well see house prices fall more significantly,” she added.
Liam Bailey, head of global research at Knight Frank, agreed, noting that the domestic housing market has “further to fall in terms of pricing.” In its latest global housing index released Wednesday, the real estate company said U.K. house prices fell 3.1% annually in the first quarter.
“While lower prices will be welcomed by first time buyers, higher rates mean affordability will still be stretched for most new market entrants,” he said.
Mortgage rates continue to rise
The Bank of England is expected to continue its dogged efforts to tame inflation with further hikes through the rest of this year.
Market watchers now expect rates to hit a peak of 5.75% to 6% in November, though JPMorgan said Thursday that they could hit 7% “under some scenarios.”
“Markets have continued to ramp up bets in favour of higher Bank of England interest rates in the past few days,” Matthew Ryan, head of market strategy at global financial services firm Ebury, said via email. “Swap rates now see a terminal BoE base rate of 6.5% by mid-2024 — a total of 150 additional basis points of hikes.”
That leaves mortgage rates poised to rise further before coming down, adding to pain for homeowners and further exacerbating the U.K.’s worsening rental crisis as buy-to-let landlords pass on higher mortgage repayments to tenants or exit the market entirely.
“With markets now forecasting a peak in Bank Rate of over 6%, the likelihood is that mortgage rates will remain higher for longer, and the squeeze on household finances will continue to put downward pressure on house prices over the coming year,” Halifax’s Kinnaird said.
Touring a potential new apartment is more than an opportunity to get a feel for the space. Going on an apartment tour gives you a chance to ask the landlord questions about the specifics of the unit and building to make sure it’s the right fit for you. It helps you make sure the apartment ticks all the right boxes on your “want” or “need” list, from fitting your budget to having special amenities like parking. That way, you fully understand the ins and outs of renting that particular unit and won’t get hit with any unpleasant surprises like unexpected fees during or after the rental process.
It’s always a good idea to go to an apartment viewing with a list of prepared questions so you don’t forget anything. This list of what to ask on an apartment tour covers everything you’ll need to know and ask when renting an apartment.
Asking the right questions on an apartment tour
In the excitement of viewing what could be your new home, don’t forget to ask your potential landlord these questions.
1. How much is the rent?
Unless you’re a millionaire to whom money is no object, make this your first question to ask on your apartment tour as soon as you walk in the door. If the monthly rent is too expensive or out of your budget, there’s no point in continuing with the tour unless you can negotiate.
Nowadays, apartment rental costs are usually available online with apartment listings. But, sometimes, you need to inquire directly with the management company or landlord about the cost of the rent.
2. What are the lease terms?
In addition to covering important information like the cost of rent and when the lease begins and ends, one of the most important aspects of the rental agreement is the lease terms. This states how long you’ll be renting the unit. The average lease term is for 12 months, although some landlords offer the option of a month-to-month lease. Month-to-month lease agreements offer flexibility and generally have more lenient terms, but a long-term lease of a year or more has more stability. Longer-term leases can also sometimes be used to negotiate a lower rent.
Most leases will also include information about specific policies like quiet hours, guest rules and more. In addition to asking questions about the lease agreement, you should always thoroughly read through the terms before signing.
3. What do you need for the apartment application?
Most apartment applications require the same items like pay stubs, bank statements, rental history and personal information. But some landlords have extra requirements like additional references, so it’s a good idea to check if the property manager needs anything extra to process your application so you can get it as soon as possible.
4. Are utilities included?
Renting an apartment that has utility costs calculated into each month’s rent is a big money-saver. But, apartment complexes will each have different rules when it comes to utilities included. Sometimes, they’ll cover some utilities like water, other times they’ll cover all primary utilities. In some cases, you’ll pay a set amount to the property manager for a certain utility. That’s why you should double-check what utilities the property manager would and would not cover and which are your personal responsibility as tenants.
5. What are the utility costs?
If there are some utilities that aren’t covered, you can ask the landlord for a rough estimate as to how much the utilities cost. They can’t give you an exact number since costs vary depending on personal usage and time of year, but they can still likely give you an approximate number.
For utilities that aren’t covered, you can also ask how you go about setting up personal accounts for services like water, electricity or internet.
6. Are there other costs included in the rent?
Along with utility costs, the cost of rent can sometimes cover or include building or property maintenance, cleaning or access to building perks. Check with the property manager to see what rent covers each month.
7. Are there any building dues or fees?
If you’re going to live in a condo or co-op apartment building, you may need to pay regular monthly dues on top of rent and other fees.
8. Are there any application or move-in fees?
Along with the first month’s rent and the security deposit, there are a lot of upfront, non-refundable costs associated with renting an apartment. You may need to pay an apartment application fee per person applying for each apartment, which costs anywhere from $20 to $50 but can get as high as $100.
Some landlords also charge move-in fees that cover cleaning or refurbishments to the unit before you move in. All these fees can really add up, so make sure you’re aware of them all so you can budget properly.
9. Do you have any move-in specials, discounts or special offers at this time?
To entice potential renters, apartment complexes will sometimes offer special deals like getting a free month. You can save yourself major money by taking advantage of a good move-in deal, so ask the landlord if they’re offering any special deals at this time.
10. How much is the security deposit?
When apartment hunting, you’ll find that many landlords require a security deposit. Typically, the deposit is the same amount as one month’s rent, but sometimes it’s less or more depending on your credit or rental history. As long as you take good care of the apartment and only inflict the usual wear and tear, you should get the full amount back when the lease ends.
You should also inquire about what constitutes normal wear and tear and if there are any extra fees for cleaning or maintenance upon move-out.
11. Am I permitted to sublet?
Want to go spend three months in Europe but don’t want to lose your apartment? You could always sublet the unit for a few months, but the rules about subletting vary by the property manager or leasing office. If the lease agreement doesn’t specify whether or not you can sublet, and under what grounds, confirm with the landlord. You don’t want to risk getting evicted or tarnishing your reputation as a good tenant by subletting without permission.
12. Am I allowed to add a roommate to the lease?
Along with subletting, check if you can add roommates to the lease and if so, under what terms. Sometimes, you and the roommate will need to sign updated leases, but other times, the landlord won’t care.
13. When do I need to pay rent?
Rent is typically due on the first of the month, but always double-check when you need to pay rent. This information should also be listed in your lease agreement.
14. Is there a grace period for late rent?
Sometimes life happens and you’re a bit short on cash come the first of the month. Ask if there’s a grace period before you get charged late fees. The average time before being charged a late fee is between five to seven days.
15. How do I pay for rent?
Most modern apartment communities let you make online payments for things like rent, but some still prefer checks. It’s best to double-check and avoid an unpleasant surprise when your landlord asks where your already-paid rent is.
16. Are there any costs to terminate the lease early?
If you get a new job and suddenly need to move in the middle of your lease, you’ll likely need to pay extra for breaking the contract early. The exact amount varies depending on the apartment complex, landlord, state or city, so be sure you know the specifics.
You should also ask how early in advance you need to give notice to vacate the apartment.
17. Do you require renters insurance?
As protection against liability and to allow a wider pool of applicants, most landlords require their tenants have renters insurance to cover their personal property.
Even if the landlord doesn’t require renters insurance, it’s still a good idea get it in case something happens.
18. Are pets allowed? If so, what is the pet policy?
Pet parents, take note. Some apartments don’t allow pets or only permit certain species or breeds, so you have to ask the landlord about their pet policy. Moving with a pet, you may also have to pay pet rent each month or pay pet fees along with moving costs.
19. What is the guest policy?
Most properties have rules when it comes to having guests stay over. Typically, overnight guests are OK but the lease may limit how long you can have a guest stay with you.
20. How are repairs and maintenance requests handled?
Don’t wait to get woken up at midnight by an overflowing toilet to understand how to put in requests for repairs or maintenance. If your building has an online tenant portal, you can likely file a request online. But other times, you’ll need to call the maintenance staff or leasing office.
You should also clarify if the building offers 24/7 emergency repairs and who to contact for after-hours emergencies.
21. What amenities does the apartment building include?
Amenities like gyms, communal areas, pools, dog parks and more can really make one apartment building stand out over another. Along with viewing different units, you can also request a complete building tour to see what amenities and perks it offers. Be sure to ask if you have to pay extra fees to use some of the amenities.
22. Does the building have a parking garage or designated parking?
Especially in big cities, street parking is always a hassle. An apartment complex with its own private parking lot or parking garage is worth its weight in gold, so make sure you ask what the parking situation is. If the complex does have its own parking, you may need to pay parking fees.
23. What security measures does the property have?
Your home is your castle, and you need to make sure it’s protected. Ask about security measures around the complex, such as cameras, locking gates and doors and security guards.
24. Who can I contact in case of emergencies?
Whether it’s an after-hours maintenance emergency or a crime has happened in your complex, make sure you’d know who to contact and how.
25. Are there any restricted or off-limits activities?
Some complexes or specific units may prohibit certain activities like smoking indoors or using a grill. If these restrictions aren’t laid out in the lease, make sure to ask the property manager.
26. Is the cost of rent ever increased? If so, by how much?
It’s normal for landlords to raise the cost of rent upon renewal, and depending on the market and demand, it could be a lot or a little. They may not have an exact answer, but by asking about price hikes, you’ll know if you need to expect one come renewal time.
If you’re worried about rising rates, ask if you can lease the unit for longer to lock in lower rates.
27. Do you offer pest control?
It’s the property manager’s responsibility to deal with pest control like cockroaches or bed bugs and you want to live in a complex that takes it seriously. Ask what preventative methods they use, what company they work with and how pest control would impact you if there were an issue.
28. How do I file complaints?
Whether it’s a complaint against other tenants or your property manager, understand the process for filing complaints.
29. Can I make changes to the unit and how will they impact my security deposit?
It’s fun to outfit your new home to your liking, but double-check what kind of decorations or changes are acceptable.
What if my apartment tour is virtual?
Since the start of the COVID-19 pandemic, the use of virtual apartment tours has become more widespread. If you’re doing a live Zoom tour with the landlord, you can ask directly. If it’s an unguided virtual tour, you can set up a phone or Zoom call with the landlord or email them a list of questions.
Save yourself time, energy and money by asking the right questions on an apartment tour
Going into an apartment tour prepared with questions helps you quickly weed out whether an apartment is right for you or not and move on to the next place.
On Monday, Washington state Gov. Jay Inslee (D) signed a series of bills into law that are designed to address the state’s housing issues, relating particularly to supply and housing affordability.
Included in the package is a bill that lifts the zoning restrictions on certain types of multifamily properties, called “middle housing,” in areas zoned for single-family housing. Another allows for easier accessory dwelling unit (ADU) permitting and construction within the state.
“This is one way we can expand a large amount of affordable housing,” Inslee said. “We need to house our growing population.”
An additional bill, House Bill 1474, is intended to “help people who were affected by racist housing covenants designed to keep ethnic and religious minorities out of certain neighborhoods, as well as their descendants, with down payments and closing costs,” according to the Seattle Times. Sponsors say it’s the first statewide bill of its kind.
The governor also signed House Bill 1074 into law, which requires landlords in the state to show documentation of damages when they withhold part of a renter’s security deposit after the tenant moves out.
“This session, our Legislature needed to go big so people can go home,” Inslee said. “And our Legislature, I’m happy to say, has gone big this year so people can go home. Congratulations to the state of Washington. I’m signing some great bills here today.”
But while Gov. Inslee is singing the bills’ praises, some housing advocates have expressed disappointment, stating some of the measures do not go far enough to address the root issues behind the affordability crisis.
“The Legislature had opportunities to do something about the massively unaffordable rents that are driving housing insecurity for so many people across the state,” Michele Thomas, director of policy and advocacy for the Washington Low Income Housing Alliance, told the Seattle Times. “They completely turned their back on that.”
Other measures that were debated but that did not make it to a vote included a cap on rent increases and a requirement that landlords provide six months of notice to tenants before increasing rent by a certain percentage.
Rent stabilization also continues to remain at the forefront for some state legislators. Democratic Sen. Patty Kuderer, the chair of the Senate Housing Committee, told the Times that the slate of bills signed into law could increase the housing supply and lower costs. In the meantime, a program to limit rent increases should be considered, she said.
“I’m not talking about them not ever being able to increase the rent,” Kuderer said. “What I’m talking about is that it would be on a temporary, time-limited basis and tied to the housing inventory.”
As the pandemic shut down office life in Los Angeles’ downtown financial district, Claude Cognian tried to keep his gastropub Public School 213 open. But the evacuation of white-collar workers made way for an influx of homeless people and drug users — and more than a few troublemakers striding in the front door.
“It was hard to keep hostesses at the door, because they got scared,” said Cognian, chief executive of the restaurant’s parent company, Grill Concepts Inc.
Three break-ins cost as much as $12,000 each time just to repair the windows, all while the bottom line was cratering in the absence of the office employees who used to gather for lunch and after-work drinks. With sales down 75% from pre-pandemic days, his company closed the downtown gastropub in August and is not planning to return.
“Our bet was that downtown was going to come back, and it hasn’t,” Cognian said.
For decades the Los Angeles financial district was the beating heart of downtown, the corporate muscle that gave the city of sprawl a soaring glass skyline. But the pandemic and the wave of remote work hollowed out its skyscrapers and helped shut many restaurants and businesses that relied on crowds of workers. Though the neighborhood shows signs of recovery, few expect it to return to being the bustling hive of suits and ties that it was.
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To many insiders — the urban planners, real estate developers and business owners with interests in it — the area will recover only if its identity grows more textured than a zone of white-collar office space.
Desirable office addresses were already spreading beyond the financial district before the pandemic, as downtown experienced a renaissance in housing, art and entertainment on blocks previously shunned by investors and residents.
To the south, billions of dollars were spent improving the blocks around Crypto.com Arena with hotels, housing and entertainment venues. Obsolete century-old commercial and industrial buildings to the east were renovated into desirable housing and fashionably unconventional offices. Billions more were spent north on Bunker Hill where the Music Center including Walt Disney Concert Hall and office skyscrapers have been joined by museums, apartments and a high-rise hotel.
The housing boom drew residents to the financial district as well, and that has kept it from turning into a ghost town.
But for the area to truly come back to life, many say it will need to follow the path of Lower Manhattan. The financial capital of New York faced an exodus after 9/11, but city officials and investors staved it off by making it a place of more diverse uses. It is still an office district but is far more lively than it used to be since it also became a residential neighborhood with more shops, restaurants, parks and hotels than it had before the attacks. A performing arts center will open in September.
“Cities evolve. That’s what they do,” said downtown L.A. business representative Nick Griffin. “From natural disasters, wars and pandemics. They evolve with market changes, customer preferences and cultural shifts. Downtown has evolved pretty dramatically over the last 20 years and the next five or so are going to be very interesting.”
Many companies have returned to their offices, but on a limited basis as their employees work some days from home. “For Lease” signs clutter building fronts, tacked over restaurants and bars that once served lively hordes of office workers. Graffiti marks windows.
At Public School 213, the chairs are stacked neatly on tables as if it just closed for the night. Other former restaurants have been gutted by their landlords. Sidewalks are quiet, sometimes eerily so.
Downtown’s centers of gravity have shifted numerous times since its days as a remote Spanish pueblo.
The plaza by Olvera Street near the Los Angeles River was el centro until the late 19th century. When the railroads arrived in the American era, the business elite shifted the commercial district south from the plaza toward 1st Street in the Anglo section of the racially divided city, said Greg Fischer, an expert on the history of downtown who worked on planning matters for former City Councilwoman Jan Perry. Main, Spring, Broadway and Hill streets became the business hub.
In the early 20th century, elite social clubs such as the Jonathan Club, the California Club and the Los Angeles Athletic Club erected new buildings on the west side of downtown where property was relatively cheap. Soon the rooming houses, small apartment buildings and ramshackle Victorian homes there gave way. Richfield and other oil companies headquartered there, the seeds of today’s financial district.
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In “the Jetsons era,” as Fischer described the 1960s, corporate leaders viewed the Spring Street-centered office district as increasingly obsolete and passé and moved to newer buildings in the financial district. Downtown lost a lot of itslifeblood during that time, he said.
“In the years after World War II, downtown was a shopping, office and entertainment area,” Fischer said. “By the 1960s the office component had shifted west, most entertainment went to suburbs and housing just evaporated.”
Among the big businesses with offices in the west were the Richfield, Union, Signal, National and Superior oil companies. Pacific Mutual Life Insurance Co. was headquartered there and Bank of America had a big presence.
The boundaries of the financial district are not officially outlined, but property brokerage CBRE defines it as the office center south of Bunker Hill and 4th Street, flanked on the west by the 110 Freeway and on the east by Hill Street and extending south to 8th Street.
By the 1980s, much of downtown was moribund; buildings that once thrummed with commerce were dilapidated and vacant or underused. There were pockets of vibrancy, notably the Jewelry District and a Latino-centric shopping zone that emerged among aging buildings along Broadway in the Historic Core. The Civic Center around City Hallremained one of the largest concentrations of public administrative buildings in the country, employing thousands of workers.
But the financial district was the shinythriving part of the city, a high-rise office park for lawyers, bankers and accountants who piled into their cars for a mass exodus at the end of each workday.
To many, the neighborhood felt like a corporate fortress, invisibly walled off from the rest of downtown. Business leaders were painfully aware that downtown L.A. lacked the vibrancy of other big cities because it had so few residents, but was stuck in a chicken-and-egg dilemma: People didn’t want to live there because it lacked restaurants, grocery stores and other typical city-life amenities, but merchants didn’t want to set up shop because few lived there.
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The stalemate began to break around 2000 with an ordinance that made it easier to redevelop obsolete office buildings into housing. The relocation of the Lakers, Clippers and Kings pro sports teams to the new downtown arena then known as Staples Center brought thousands of sports and music fans and led a wave of development south of the financial district.
Decades of efforts to add rail service and thousands of apartments and condominiums helped create a more vibrant downtown that was taking on the flavor of other big cities before the pandemic.
“All of a sudden people were walking dogs and pushing baby carriages,” architect Martha Welborne said. “New restaurants came in, even destination restaurants that weren’t just for the people who worked downtown or lived there.”
Fortunately for downtown’s future prospects, its apartment towers remain nearly fully occupied. More than 35,000 units were built after 1999, when so few people lived there that downtown didn’t even have a big-chain grocery store.
Three new hotels have recently opened and a 42-story apartment tower will start leasing later this year. Bottega Louie, one of the region’s top-grossing restaurants before it shut down during the pandemic, reopened in 2021. A few blocks away, legendary Beverly Hills steakhouse Mastro’s also opened a seafood restaurant last year near Crypto.com Arena.
And last week, Metro opened its new Regional Connector, a 1.9-mile underground downtown track adding three stations and linking different lines to make travel more seamless.
Though some business owners have abandoned the financial district, others see an opportunity to get in at an affordable price during what they hope is a temporary economic dip.
Restaurateur Prince Riley recently leased a spot on Grand Avenue that was last home to the Red Herring restaurant. He grabbed it because he liked the location and it was already built-out for upscale dining.
“You can see all the love and care that went into this space,” he said. “They were a casualty of COVID.”
Riley and his wife plan to open their restaurant, named Joyce, in July, featuring a raw bar and Southern-style seafood such as crudo and ceviche. They moved into the apartment building upstairs to be close to it.
The couple like being near Bottega Louie, a popular Whole Foods grocery store and the recently opened Hotel Per La, which took over a lavishly refurbished 1920s building last occupied by another hotel that closed early in the pandemic.
“I can see business picking up,” Riley said. “This is an opportunity from a terrible tragedy like COVID. We wouldn’t have had this otherwise.”
A key factor keeping downtown teetering between recovery and a further downward slide appears to be discomfort with the streets and the sense that they are not as safe as they were before the pandemic.
The blocks close to Metro’s underground 7th Street/Metro Center station, where multiple light and heavy rail train lines meet, are among those that have changed the most since the pandemic as the Metro system struggles to combat rampant drug use and serious crimes such as robbery, rape and aggravated assault on its lines.
Thegrowing number of homeless people on the streets has been an issue in other cities too, said Cognian of Public School 213. His company also closed restaurants in Seattle and San Francisco because customers at their urban locations trickled away as unhoused people commandeered the sidewalks.
“Hopefully, we as a city, as a state, find a solution for the homeless,” he said. “If the homeless situation doesn’t get solved in some fashion that allows tourists, office workers and businesses to operate, it’s just going to bring down the area.”
Real estate broker Derrick Moore of CBRE, who specializes in matching restaurant and shop operators with landlords, said leasing of retail space downtown has improved in recent months, especially compared to the dark days of the 2020pandemic shutdown when downtown fell silent.
“It seems like ancient history,” Moore said, “but it was very devastating to one’s psyche.” And to downtown businesses.
In the wake of the COVID shutdown, downtown overall lost more than 100 food and beverage establishments with a combined footprint of more than 1 million square feet, Moore said.
“That’s restaurants, bars and lounges, juice bars, boutique coffee operators and even national brands,” Moore said. “A good portion of those remain vacant.”
Replacement tenants like Joyce restaurant are starting to come in, he said, with leasing and property showings picking up in the first quarter at a “resoundingly” busier pace than early 2022. Moore has taken potential tenants to the empty Public School space, where across the street the failed Standard Hotel just reopened under new management as the Delphi.
Faced with a challenging market, retail landlords have cut their asking rents as much as 50% from pre-COVID prices, Moore said, and more than doubled the amount they are willing to spend on tenant upgrades such as installing restaurant kitchens and restrooms, and providing periods of free rent.
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The financial district also faces a struggle of changing tastes, with many firms bypassing the gleaming skyscrapers that were the height of prestige in the late 20th century in favor of campus-style offices anda more laid-back vibe.
Even legal firms, long a stalwart in the financial district, are turning elsewhere in some cases. One firm established in February recently opted out of putting its office there.
“When we started to look at space it became very clear to us that locating in the financial district was a very different proposition than it used to be,” said Matt Umhofer, a partner at Umhofer, Mitchell & King. “Downtown has changed dramatically, and we wanted to rethink what it means to be a law firm in Los Angeles and let go of preconceived notions of needing to be in the financial district in order to be relevant.”
The fledgling firm opted instead for an office in Row DTLA, a campus of shops, restaurants and offices created out of century-old warehouses near the Arts District, east of the financial center, even though office rents in the Arts District are often higher than they are in the glitzy skyscrapers.
“The short version is, being in the financial district isn’t as cool as maybe it was in the past,” Umhofer said.
The spotty attendance of office workers has changed the character of business centers across the country, said Mark Grinis, leader of consulting firm EY‘s real estate, hospitality and construction practice.
An analysis by EY found that offices are being used at only 25% to 50% of the level they were before the pandemic.
“In some locations, three-quarters of the people that normally would have gone in, didn’t,” Grinis said. “People are not on the subway, ordering sandwiches at lunch or having a drink after work.”
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Vacant offices and storefronts can hinder recovery, he said, because people shy away from empty spaces.
“Three blocks of vacant houses in a residential neighborhood ultimately becomes a negative,” he said. “An office center is not that different.”
The physical appearance of vacancy becomes more alarming when graffiti, litter and grime follow and create a bad “multiplier effect,” Grinis said.
Stopping the spiral starts with making the streets safe and getting homeless residents into better housing, but there are also public policy decisions that could help landlords convert office buildings to housing if they are no longer competitive on the office leasing market.
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And the market has been brutal. Owners of some of downtown’s office high-rises have faced defaults, foreclosures and rushed sales in the face of falling demand, real estate data provider CoStar said.
The owner of two of the financial district’s premier office towers, 777 Tower and Gas Company Tower, said in February that it defaulted on loans tied to the buildings. Other high-rise owners are in similar straits.
In the face of rising vacancy rates, “those defaults could signal pain to come for the 69-million-square-foot downtown L.A. office market,” CoStar said.
Owners of buildings facing foreclosure sometimes don’t have enough money to build out new tenants’ offices, as is customary, which hinders strapped landlords from recovering financially.
Commercial landlords are getting hit on multiple fronts, said Jessica Lall, managing director of the downtown office of CBRE.
“What we’re seeing is a perfect storm when it comes to the office distress in downtown L.A.,” she said.
Loans on large-scale properties are maturing at a time when interest rates are high, making refinancing a challenge, Lall said. There is widespread uncertainty among tenants about how much space they will need to rent in the future if employees work remotely at least some of the time.
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Those issues are compounded by “the general perception around downtown being unsafe,” she said. “All urban centers are grappling with that issue right now.”
The downtown office vacancy rate — the share of total space that is unleased — climbed to 24% in the first quarter, up from 21.1% a year ago, according to CBRE. More empty space is coming, the brokerage said, pushing estimated availability to a daunting 30% as some companies shrink their offices or move away from downtown.
Law firm Skadden, for example, a large longtime tenant in downtown’s Bunker Hill district, has decided to move its offices to Century City .
The landlord of the U.S. Bank Tower, downtown’s tallest office tower at 72 stories, remains bullish on the market in spite of its troubles and recently spent $60 million to make the building more attractive to tenants by adding hotel-like amenities.
“People need offices,” said Marty Burger, chief executive of Silverstein Properties, which owns the tower. “Not every company in every industry needs an office, but the majority of them do.”
Among the reasons for offices are collaboration and education, he said. “How do you mentor the young folks who are coming up in your industry if the older people aren’t in the office for younger people to learn from? There is a whole ecosystem where you need people in an office now.”
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Companies may end up using their offices fewer days of the week than they used to as remote work and shortened schedules grow in popularity, he acknowledged: “Fridays may never be Fridays again.”
Burger says his optimism about downtown L.A.’s potential for improvement has a foundation in New York, where Silverstein built One World Trade Center on the site of the Twin Towers.
“After 9/11, everyone said that no one would ever live there or work there again,” Burger said.
In 2001, the neighborhood had about 20,000 residents and saw little activity after office hours. Now rebuilt, the neighborhood has about 75,000 residents and a greater mix of office tenants including businesses in tech and advertising in what was mostly a banking center before, Burger said.
“It’s a vibrant 24/7 community,” he said.
Many see this as the best future for L.A.’s financial district.
The city’s tight housing market combined with the downturn in office rentals opens the possibility to convert some office buildings into housing or hotels.
More residents and visitors would make the neighborhood more dynamic and better able to support restaurants, shops and nightlife, said Griffin, executive director of the privately funded Downtown Center Business Improvement District, a nonprofit coalition of more than 2,000 property owners.
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“If we trade some office for residential, that’s a good thing.”
The pandemic’s blow to the office market “is an opportunity that none of us ever imagined happening,” Welborne said, “transforming office buildings into residential buildings and reimagining our entire downtown.”
You may not think it’s a big deal, but a bad credit score can turn your life upside down in ways you don’t realize. Think about your daily life — where you live, what you drive, where you work — these can all be affected by a low credit score.
The good news is a bad credit score is something you can fix, although it takes time and careful planning. Maybe you don’t know your credit score or whether it’s good or bad. That’s okay — this guide will walk you through what a bad credit score is, the ways it can affect your everyday life, and what you can do to fix it.
What’s Ahead:
What is a bad credit score?
A credit score is a number used by lenders and other companies to determine your creditworthiness or how likely you are to repay a loan or pay your bills on time. Lending or renting to individuals is a risk. A credit score helps lenders and creditors understand your risk level before they enter into an agreement.
FICO credit scores range from 300 to 850. A bad credit score typically is a score below 660. Credit scores are divided into ranges, with bad credit scores ranging from fair to very poor:
Excellent
781-850
Good
661 – 780
Fair
601 – 660
Poor
500 – 600
Very Poor
300 – 499
Some lenders or industries rely on different types of scores to make decisions, but for the most part, these are the ranges you should consider in relation to your credit score.
How a bad credit score affects you
Unfortunately, having a bad credit score can affect not just your financial life, but also where you can live, work, and shop. Here are some of the ways having a bad or low credit score can affect you:
Securing a loan is more difficult
A low credit score sends up red flags to lenders that you are a lending risk. Bad credit makes it infinitely harder to prove that you are worthy of approval for a mortgage, auto loan, or other loan products.
Higher interest rates
If you still qualify for a loan or line of credit, chances are you will end up with much higher interest rates than someone with good credit. Higher interest rates mean that you’ll pay more interest over your loan term unless you have funds to pay it off early. Depending on the type of loan, you could end up paying thousands of dollars more than you would if you have good or excellent credit.
Fewer options renting an apartment
If you’re on the hunt for a new house or apartment to rent, your low credit score could put a damper on your search.
Landlords and property management companies want to rent to responsible tenants. They use credit checks to determine your ability to pay rent. Poor credit could mean having your application denied or putting down a larger security deposit to secure an apartment.
Higher insurance premiums
Insurance companies sometimes run credit checks when setting premiums. They may also use a credit-based insurance score that’s based on your information from your credit report. The report will reveal the reasons for your low credit score, and you could end up paying significantly higher premiums than you would with good credit.
Trouble purchasing a cell phone
Mobile providers use credit checks to approve new contracts. Your bad credit score makes you a high-risk customer with most providers. Poor credit could mean saying goodbye to the latest iPhone or Galaxy with unlimited data and hello to a prepaid phone plan.
A harder time landing a job
In some states, employers are allowed to run credit checks on prospective employees during the hiring process. Jobs in finance or management that require handling large sums of money are prime candidates for credit checks. You may have a hard time convincing a company to trust you with their money if your credit report reveals a history of poor financial decisions.
You won’t qualify for most credit cards
Having a credit card might seem like a rite of passage, but there’s no guarantee that you’ll be approved if you have a bad credit score. Most rewards credit cards that earn points, miles, or cash back or come with travel and other perks require good to excellent credit.
There are some credit cards for people with bad credit, but they are few and far between and don’t offer the same level of benefits. You could also resort to a secured credit card, which relies on a security deposit instead of a credit check to secure the card. Secured credit cards typically have lower credit limits and high interest rates.
Related: Best Secured Credit Cards
How credit scores are calculated
In most cases, when someone talks about credit scores, they are referring to your FICO score. The FICO credit scoring model was created by the Fair Isaacs Corporation. It’s a three-digit number, ranging from 300 to 850, that gives a snapshot of your credit and your risk level as a lendee or customer. Five factors go into calculating FICO credit scores:
Payment history (35%). Vendors report your payments to credit bureaus. Late payments stand out like a sore thumb on credit reports and make you more of a lending risk.
Amounts owed (30%). Creditors also look at how much on your available credit you’re using at any given time. Using a higher percentage of your available credit creates a picture of someone at risk of defaulting on payments because they are overextended.
Length of credit history (15%). The length of your credit history looks at factors like how long your accounts have been open, the age of your newest account, and the average age of your credit accounts. Each time you open a new account, your credit age may drop.
Credit mix (10%). The type of credit accounts you have open is factored into your FICO score too. Credit types can include mortgage loans, installment loans, credit cards, retail credit accounts, and other financial accounts.
New credit (10%). New credit refers to any time you open a new credit account, or someone runs a hard credit check.
Several FICO score models exist, including models for specific industries like auto lending and mortgage lending. FICO Score 8 is the most widely used credit scoring model.
The difference between VantageScores and FICO scores
FICO isn’t the only scoring model. VantageScore is another model used by lenders to determine creditworthiness. VantageScore was created in 2006 by the three primary credit reporting bureaus, Equifax, Experian, and TransUnion. There are currently four versions of VantageScore, with the latest model released in 2017.
The major difference between VantageScores and FICO scores is the score range. Earlier VantageScore models have a score range of 501 to 990. Your VantageScore can often be significantly higher than your FICO score. VantageScores can vary, too, depending on which credit bureau or model is used, just like FICO scores.
How to improve your credit score
If your credit score isn’t where you want it to be, or it’s becoming a problem for your finances, you can improve it with some hard work and patience. Like anything else, you may have to make some sacrifices, but a good credit score can unlock so many things that it’s worth giving up some conveniences now to improve it.
Here are some things you can start doing right now to improve your credit score.
Related: How To Improve Your Credit Score, Step By Step
Access your credit score and reports
To improve your credit, you first need to know where it stands now. You can do this by getting copies of your complete credit reports from all three bureaus — Experian, Equifax, and TransUnion. Your reports are available for free once a year at www.annualcreditreport.com or by calling (877) 322-8228.
Errors aren’t common on credit reports, but they do occur from time to time. Check your reports for anything incorrect and if you find something, dispute it with the credit bureau. Even small errors can have an impact on your credit.
You can buy your official FICO credit score through myFICO or use free credit score tracking apps Credit Karma or CreditWise to see your score.
Pay your bills on time
Your payment history is a major player in determining your credit score. Your goal moving forward is to make all of your bill payments on time. Late payments are reported to the credit bureaus and will drop your score even further. A record that shows a history of on-time payments, though, will boost your score. Set alerts to remind you of upcoming bill payments or, even better, set up automatic payments for at least the minimum amount due to ensure that you don’t miss any payments.
If you’re having a hard time paying your bills, reach out to creditors to see if they are willing to work with you. You might qualify for hardship or payment programs that will help you pay off any debts.
Pay down your debt
To repair your credit, you also want to lower your credit utilization ratio. You do that by paying off your debt, including revolving credit accounts, like credit cards or lines of credit. Every little bit helps. Make at least minimum payments, but pay extra if you have additional funds available. This will lower the amount of outstanding debt compared to the total credit available to you.
Apply for a secured credit card
Secured credit cards are designed for people with bad credit or no credit. You can qualify for a secured credit card through a security deposit instead of a hard credit inquiry. Your security deposit essentially becomes your credit limit. As you make small purchases on your card and pay the balance off on time and in full, those payments are reported to the credit bureaus.
If you go this route, try to keep a low balance and never carry it over month-to-month. Secured credit cards often come with high APRs, so you could end up paying expensive interest charges if you don’t pay off the entire balance each month. Some credit card issuers will check your credit periodically and switch you to an unsecured card if your credit has improved.
Apply for a credit-builder loan
Another option to boost your score is to apply for a credit-builder loan. Similar to secured credit cards, these are personal loans for people with bad credit. Credit-builder loans work differently than traditional loans, where you receive the loan amount upfront and then pay it back over time. With a credit-builder loan, you make fixed payments each month until the end of the loan term, and then you receive the loan amount. These loan payments are reported to the credit bureaus the same as any loan.
Will you pay interest as you do with other loans? Yes, and you may also have to pay a fee to take out this kind of loan, but that’s the price you might have to pay to avoid another credit inquiry or to qualify for a loan.
Become an authorized user
Have a close family member with good credit add you as an authorized user on their credit card. Although this strategy isn’t likely to cause a massive jump in your score, it could have some impact, especially for individuals with a shorter credit history. Make sure the card issuer reports authorized users to the credit bureaus or this won’t help you.
Summary
Improving a bad credit score can not only save you money but can also open up opportunities in most areas of your life. Use the tips and tools listed above as a guide to understanding your credit score and what you can do to boost it over time.