We’ve all been there: a late credit card payment, a tough decision between making student loan payments and buying concert tickets, or trying to make a new car payment that exceeds your budget. And then, all of a sudden, your credit score takes a hit. Our credit scores are affected by a number of factors, but we don’t always see how our credit, in turn, affects us in our daily lives. Among other things, having poor credit makes it hard (but not impossible) to find an apartment. So, just how does your credit score affect your rental application and what can you do about it? We’ll explain.
The Basics
It’s common for most landlords to require a background and credit check when submitting your apartment application. The background check will show any criminal charges or eviction history in your past, while your credit check will show your score and a number of factors that contributed to it, including:
- Student loan payments
- Credit card payment history
- Number and type of credit cards
- Opened and closed lines of credit
- Loan applications and loans taken out
- Bankruptcy, foreclosure, repossession
Generally speaking, many landlords and property managers want to see a score of 620 or higher, but it can vary. Check out the chart below to see how scores are rated:
Why It Affects Your Apartment Application
If your credit score is below 620, it will signal to the landlord that you’re a risky renter. Ultimately, landlords rely on your rent money as income, and they want a tenant who is going to pay them in full and on time every month. So, if your credit score is low or you have a history of late payments, they might be less inclined to choose you as their tenant.
When you submit your application, you’re in competition with other renters vying for the same apartment. Put yourself in the landlord’s shoes for a moment and think about which renter you’d pick with the following example:
Andy has a credit score of 550. His credit card payments are chronically late and he recently bought a new car for which he has to make monthly payments.
Emily has a credit score of 660. Her credit card payments are usually on time and she makes student loan payments that are generally on time.
Emily’s credit score and history aren’t perfect, and that’s ok. There are going to be instances where you can’t make every payment on time, and bills are going to pile up. Nobody is perfect, and landlords know that. In this situation, though, it’s still easy to see which choice you’d make if you were the landlord. Andy’s credit score would be classified as “Very Bad”, and his history of late payments combined with his new car payments make him a riskier choice than Emily.
What You Can Do
Before going into an apartment tour or meeting with a potential landlord, it’s good to be upfront about your credit score. Let the landlord know any factors that contributed to your low score, improvements you’ve made since finding out your score, and show pay stubs to prove you can make monthly rent payments. Be honest and take responsibility; it will show that you’re aware of your shortcomings and are ready to make improvements.
Your credit score itself is very important in the rental application process. It could be the one distinguishing factor between another potential renter and you. Keeping up with your payments, working towards improving your credit score, and having an honest conversation with the potential landlord are all important if you’re trying to land your dream apartment. Once you’re ready to find your next apartment, keep these key points in mind and monitor your credit score so you know what you’re working with when you’re ready to begin the the apartment application process.
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