One of the most common apartment guide questions that we hear is “What credit score do I need to rent an apartment?”
Your credit score is important, but a lot more than just one number goes into consideration when you are searching apartment rentals. Your landlord will put a lot more stock in how you have handled your previous rental payments than anything else.
Indeed, your credit report is an important document when it comes to searching apartments for rent. Apartment owners usually want to see your credit reports so that they know that you will be paying them your rent on time. Credit reports are reflections of your payment history and are used by banks, employers and credit card companies to determine the likelihood that you will pay your bills.
Credit reports are available from three major credit bureaus, Experian, TransUnion and Equifax, which all have their own ways of calculating credit scores. A TrueCredit 3-in-1 Credit Report can show you how each credit bureau compiles and reports your credit history as well as enable you to see discrepancies between them.
A credit report contains information on how you have paid your bills. The three credit bureaus collect information from lenders, landlords, insurance companies, utilities and credit card companies to generate a report on how likely you are to pay back a debt.
Your credit report contains identifying information, credit history, public records, and inquiries. Although this sounds self explanatory, be sure to review this information as it may vary across lenders or companies that report to the credit bureaus.
Your credit history will include all lines of credit under your name, including credit cards, student loans, bank loans, mortgages. The report will include the dates and details on monthly payments, how much you took out and how much you still owe. Your credit history is weighted by payment history (35%), amounts owed (30%), length of credit history (15%), types of credit (10%), and new credit (10%).
The public records section reports on situations when a failure to pay a debt becomes a public matter, such as a tax lien or if you file for bankruptcy. Hopefully your public records section is clean, as these matters can have serious negative consequences for your creditworthiness. The final section, inquiries, shows who requested a copy of your credit report and when it was requested.
Apartment owners then either make a ‘hard inquiry,’ when they contact the credit bureau directly, or a ‘soft inquiry,’ where they ask you to provide a credit report before you rent an apartment. Repeated ‘hard inquiries’ can adversely affect your credit score so be careful how many times apartment owners or lenders have pulled your credit report.
Having bad credit may restrict you from some apartment complexes, but there is no need to fret if your credit is less than perfect and you are amidst an apartment search. Many apartment owners will contact your previous landlord to see if you were timely and consistent with your rent payments.
If you do have less than perfect credit, be sure to get a recommendation from your previous landlord emphasizing your reliability and timeliness on rent payments. Or if there are significant problems that your credit report will display be sure to have a letter of explanation written.
We will revisit this topic with further detail in upcoming apartment living blog articles, but we have found some helpful and easy to digest information over at Video Credit Score, which is a video blog with helpful tips regarding understanding and improving your credit history.
What has your experience been? Have you been denied from an apartment rental based solely on your credit score?