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Because many landlords check applicants' credit, your credit history could make a big difference in your next apartment search.
For would-be renters, the credit-check process may seem mysterious. If you're wondering what landlords scrutinize when they check your credit, here's a look, along with strategies for landing a place to live.
Know your credit
If you're worried about what a potential landlord or property manager might find on your credit report, there's a simple fix: Look first. You're entitled to a free copy of your credit report from each of the three major credit bureaus. Those will include all the credit information the landlord will see, sometimes more.
You can't control how a landlord or property manager might interpret a credit report, but if you already know what's in it, you'll be more prepared to answer questions and provide context, if you need to — and getting an apartment may become a bit easier.
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How landlords and property managers check credit
A credit check can mean a lot of different things, and credit score requirements can vary among apartments. It's sometimes possible to rent with no credit history at all.
Landlords might simply verify your identity and check your credit score. Others may opt to run background and credit checks, or look at social media, county records and bank statements.
Here are a few other ways landlords and property managers may check credit:
Landlord associations
Organizations such as the National Association of Independent Landlords offer tenant credit reports to landlords for a fee. Depending on the association, these checks may count as hard inquiries and cause credit scores to dip temporarily.
Tenant screening services
Some tenant screening services offer credit reports to landlords, others don’t. On e-renter.com, for example, landlords request a certain credit score range, and the site tells them whether the tenant meets or exceeds that requirement. It may also include evictions, bankruptcies, collections and other background information.
Credit bureaus
Equifax, Experian and TransUnion offer several credit screening products for the rental market. These services may require an applicant to initiate the check, and generally count it as a soft inquiry, which doesn't affect credit scores.
Experian says rental applicants can pay $19.95 to buy a copy of their Experian credit report online and choose to grant one or more prospective landlords access to view their credit report for up to 30 days. Personal information, including Social Security and account numbers, are not shared with prospective landlords.
TransUnion offers a similar service where landlords can pay to view the prospective tenant’s credit report or pass on the cost to applicants. The applicant has to allow access. Equifax also offers a tenant screening check.
Not all landlords and property managers do credit checks online. Some may request a copy of an applicant's credit report or ask about credit in person.
Credit-related deal breakers
Landlords or property managers generally aren't looking for immaculate credit, but certain negatives may make them more likely to reject an applicant. Examples would be credit card charge-offs or car repossessions.
To be sure, good credit doesn't ensure approval. Factors such as income, past evictions and criminal convictions can also play a big part. If possible, talk to the landlord to get a better idea of what they are looking for before applying.
How to rent an apartment with no credit
If you don’t have credit, try to find a family member or friend with good credit who’s willing to co-sign a lease for you. By co-signing, they are promising to pay the rent if you don’t, which makes it a less risky deal for the property manager or landlord. After a certain number of on-time payments, your landlord or property manager may agree to take your co-signer off the lease.
Or, if you have a lot of savings, you could offer to pay several months of rent upfront to lock down a deal.
Once you find a place, start building credit by applying for a secured credit card, getting a credit-builder loan or getting your rent payments reported to the credit bureaus.
How to rent an apartment with fair or bad credit
Renting with blemished credit can be more challenging, but it’s not impossible. A lot depends on the reasons your credit is low. A landlord may overlook isolated credit missteps that can be explained, such as those due to job loss.
Even with poor credit, you may still be able to get an apartment with a co-signer, a larger security deposit or advance rent payments. Sometimes, looking for an apartment in a lower price range can make it easier to find an offer with more flexibility.
If your score is low because you consistently need to lean on credit or have trouble juggling due dates, see if it's possible to cut back on any expenses. Finding more ways to save on bills could help you keep up with payments, which can help build your credit.
As a seasoned expert in the realm of personal finance and the intricacies of tenant-landlord dynamics, I bring forth a wealth of knowledge gleaned from years of dedicated study and practical experience. My expertise extends to the nuances of credit evaluations conducted by landlords, an area crucial for anyone navigating the apartment rental landscape. Let me delve into the intricacies of the concepts covered in the provided article.
Understanding Your Credit Report: The article wisely advises prospective renters to proactively acquire a copy of their credit report from each of the three major credit bureaus—Equifax, Experian, and TransUnion. This step not only empowers individuals with knowledge about their credit standing but also allows them to anticipate and address any concerns that may arise during the landlord's evaluation.
Diverse Credit Check Methods: The article aptly points out the variability in how landlords and property managers conduct credit checks. While some may solely verify identity and check credit scores, others delve deeper by examining background information, social media, county records, and bank statements. Additionally, organizations like the National Association of Independent Landlords and tenant screening services offer comprehensive reports for a fee, providing landlords with a broader perspective on an applicant's financial history.
Credit Bureaus and Tenant Screening: The mention of Equifax, Experian, and TransUnion highlights the pivotal role of credit bureaus in the tenant screening process. These bureaus offer specialized products catering to the rental market. Notably, some services, like those offered by Experian, enable applicants to initiate soft inquiries, preserving their credit scores.
Dealing with Credit-related Hurdles: The article astutely addresses potential red flags in credit reports, such as credit card charge-offs or car repossessions, which might impact a landlord's decision. It emphasizes that while good credit is beneficial, other factors like income, past evictions, and criminal convictions also influence approval.
Strategies for Various Credit Scenarios: For those with no credit history, the article suggests co-signing with a creditworthy individual or offering advanced rent payments. It also provides guidance for individuals with fair or bad credit, highlighting options like larger security deposits, co-signers, and exploring apartments in lower price ranges.
Building Credit for Future Rentals: The article concludes with proactive measures for building credit, including securing a secured credit card, obtaining a credit-builder loan, or having rent payments reported to credit bureaus. These strategies empower individuals to enhance their creditworthiness over time, improving their prospects for future rentals.
In essence, the article serves as a comprehensive guide for individuals navigating the complex terrain of credit evaluations in the context of apartment rentals, providing valuable insights and actionable strategies for success.
