Future landlords and leasing agents will often run a credit check to determine your financial situation. In a sense, your credit score is a security measure; it helps them decide if you’ll be fiscally responsible in the future. While this may seem unfair if you’re currently building your credit score, landlords and leasing companies aren’t looking for financial perfection. Instead, they want to see that an applicant will simply pay their rent in full on a regular basis. It’s nothing more than smart business. So let us help you to understand how your credit score affects renting an apartment.
Most often, individuals and companies who are renting an apartment want their applicants to have a credit score greater than 620. Anyone under that threshold will be considered more likely to miss a rent payment or break their lease. As a result, a score below 620 could make it more difficult to rent an apartment—especially in competitive areas. If twenty people apply for the apartment, it makes sense for the landlord to choose the person with the best credit.
Of course, a lower credit score doesn’t mean you’ll never find an apartment. It’s still very possible to rent with a lower credit score. If you can demonstrate steps towards improvement to your landlord or a specific reason your credit was hurt, you’re on your way to finding the apartment of your dreams.
For example, if your credit score is low because you regularly make late payments, that will cause a problem. But if you have a lot of debt due to student loans or medical expenses, most landlords and leasing companies will take that into consideration.
How Landlords and Leasing Companies Check Your Credit Score
Landlord and leasing companies generally check your credit score in one of three ways. More often than not, they’ll rely on landlord associations, tenant screening services, or credit bureaus. It’s important to know how your landlord or leasing company will check your credit, because it can have a major impact on your credit score itself.
Landlord associations offer tenant credit reports to their landlords for a fee. It depends on the association, but these checks often count as hard inquiries and will cause your credit to drop. On the other hand, a tenant screening service will often count as a soft inquiry because they require you to initiate the check, meaning it will not affect your credit. This is also true is your landlord or leasing company reaches out to a credit bureau.
Renting an Apartment When You Have Bad or No Credit
The fact of the matter is that a good credit score for a potential tenant is over 620. But if you’re score falls below that benchmark (or you don’t even have credit history), it’s not impossible to find a new place to live. Following our advice could help you get approved for an apartment, even if you don’t have months to improve your score.
Review Your Credit Report
Before you do anything else, you need to request a copy of your credit report. You can do this at no cost once a year. Checking your report before you shop for an apartment allows you to check for any errors that are hurting your score, and to understand your current financial situation.
Avoid Shopping Around
It can be tempting to put in as many applications as possible. A lot of people think that if they apply to as many apartments as they can, they’ll eventually get accepted by at least one. But in reality, each request is recorded and sent to the three major credit bureaus. If you make a high number of requests in a short period of time, your credit score will drop even lower.
Provide Proof of Employment
Your credit score can tell a future landlord or leasing company that you’re responsible. If you have a good credit score, they can trust that you’ll pay your bill ever month. But it’s not the only measure of responsibility. To demonstrate that you’re capable of paying your bills and follow through on your commitments, let your potential landlord call your boss to get a reference.
Include Extra References
If you’ve rented an apartment in the past—or regularly made payments for any significant expense—reach out to your previous landlords. If they can tell your new landlord that you always made payments in full and on time, you’ll be more likely to get approved.
Get a Cosigner or Roommate
Just like when applying for a credit card or loan, someone else with good credit can boost your odds of acceptance. If you can find a few cosigners or roommates with better credit than you, the landlord knows they are more likely to get paid every month.
Improve Your Credit Score
While the above steps are short-term solutions to finding an apartment to rent, the best way to get accepted is to improve your own credit score. While that may not be possible to do before you have to find a new place to live, you can start improving it now to help you the next time you’re searching for an apartment.
One of the best ways to improve your credit score is to pay of your existing debt. But you should also avoid carrying high balances on your credit scores, making late payments, and paying only the minimum payment. Your best bet is to always pay your bills on time and in full. And even if you always pay your balance off in full, maxing out your credit cards every month can still hurt your credit score.
Know Your Credit
Your credit score could make or break you. There’s nothing you can do about what your landlord may find on it or how they may interpret it, but you can impact how it affects you. Prepare yourself to answer any questions they may ask, and be ready to provide context regarding your credit score. Staying on top of things and taking active steps to manage your credit can make all the difference when trying to rent an apartment.