The rental market is experiencing a positive shift for Gen Z, as rising inventory contributes to declining rent prices. According to Redfin, the median U.S. asking rent price in December saw a 0.8% decline from the previous year, offering individuals more affordable options. However, many Gen Zers are still under financial constraints, only dreaming of having a place of their own. Here's why.
The Current Scenario for Gen Z
Young adults are finding it hard to live on their own because of the expensive housing market. Many of them live with their parents or family members because it's too expensive to rent a house. A recent report by Intuit Credit Karma found that 31% of adult Gen Zers fall into this category—furthermore, 27% of these individuals currently renting homes reported struggling with high costs of accommodation. While rent prices are showing a modest decline, experts predict ongoing difficulties in accessing affordable rental options.
Building Credit for Rental Success
For Gen Z, building a strong credit history is essential to increase their chances of securing a rental property. Landlords often scrutinize prospective tenants' credit to assess their reliability in making timely payments. Here are three key strategies to build credit effectively:
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1. Leverage Bills You Routinely Pay
Traditional credit reports may not consider routine bills like utilities and internet services. However, utilizing programs such as Experian Boost, StellarFi, and UltraFICO can help Gen Z build credit based on alternative metrics, including payments for streaming services and mobile phone plans. Over time, these programs may positively impact credit scores.
2. Become an Authorized User
Becoming an authorized user of someone else's credit card is an effective way for young adults to build credit based on a more established credit history. However, it is important to choose a responsible credit cardholder with a strong credit score. Clear communication about payment responsibilities and ensuring that the card issuer reports the user's payment history to major credit bureaus are the required steps in this process.
3. Consider a Secured Credit Card
Secured credit cards provide a straightforward entry point for individuals looking to build credit. These cards require a security deposit, usually tied to the credit line, making them more accessible for those with limited credit history. It's important to pick a secured credit card that doesn't charge an annual fee. Also, looking for a card that you can eventually switch to an unsecured credit card is a smart move. This can help Gen Z lay the foundation for establishing a positive credit history.
