Most landlords look at a variety of information when they submit a rental application. They do a background check, look at employment history and will even go as far as talking to your previous landlords and property managers to figure out if you’re a strong rental candidate. However, the one piece that’s really going to seal the deal either way is your credit report. But, what do apartments look for on credit checks?
Just about any prospective landlord will want to look at your credit history to better understand how you’ve managed your money in the past, and how responsible you really are when it comes to paying bills, making on-time payments and taking rent seriously.
How do apartments look at your credit history?
The first step to performing a check credit is to get your permission. The Fair Credit Reporting Act protects you in that it doesn’t allow just anyone to run apartment credit checks. They need a specific reason. On your rental application, you should see a section asking for your permission for a credit check. You’ll also need to provide certain information to get the process started, including your full name and social security number.
The three major credit bureaus
Next, most landlords will look at credit scores from more than one of the major credit bureaus. This way they can get an average credit score and make sure your credit is within a range they’re comfortable with for potential tenants.
There are three major credit bureaus:
- Equifax
- Experian
- TransUnion
A credit bureau generates a credit report that goes deeper than just your credit score. Reports will include information like payment history and related public records.
There are also a few primary credit scoring companies that will just provide a credit score. Since not all landlords need a thorough apartment credit check, they may instead contact FICO or VantageScore for your information.
What does a credit report show for renting?
Overall, all the pieces of a credit report demonstrate what your financial habits are like. Beyond whether you have a higher credit score or a low one, landlords and property managers want to see your payment history and how you manage your responsibilities when it comes to money. Many will interpret your pattern of behavior as a solid example of whether you’ll make a responsible tenant overall.
What are landlords and property managers really looking for?
The specific details within your credit report really shed light on your ability to meet your financial commitments. To see that you’re responsible when it comes to money, they use a credit check to look at:
- Bill pay history — how often you pay on time, are late or missed payments altogether
- Credit card account balances — how high and how many cards you have
- Outstanding loans
- The size of your credit limits
- Whether any existing accounts have gone into collections
Many landlords will also look at any additional public records that relate to your financial background, using it all to assess you as a potential tenant.
This is all in addition to your actual credit score, yet another important piece of any credit check.
The ideal credit score range
The sweet spot when it comes to your credit score as a renter is pretty large. Even what you may consider a low credit score could count as fair enough to get you an apartment when combined with the rest of your rental history and a strong background check. There’s also the fact that multiple credit checks won’t always pull the same number, so one reporting agency could end up giving you a higher score.
According to Equifax:
- Fair credit score is 580-669
- Good credit score is 670-739
- Very good credit score is 740-799
Credit scores that come in at 800 and higher are excellent, and will really make your own credit report stand out.
You’ll get a bad credit rating with any score that falls below 580.
Potential red flags
Rental credit checks may also bring up certain red flags that could affect your chances of getting approved for an apartment. This could include a bad credit score but also may mean a specific line item within your credit history is worrisome.
Certain things like applying for a new credit card or making a large purchase could temporarily lower your credit score. Other issues like missing a payment or closing a credit card account and decreasing your overall credit limit can also lower your score.
The best way to prepare for this situation is to get out in front of any issues, especially those that are easy to explain. In order to prepare yourself, run a free credit report on yourself before you start looking for apartments. Then, provide a heads-up to landlords and property managers before they run any credit checks. Not only will this prevent any misinterpretation of your credit reports, but it lets you show off you’re an honest person of good character.
Does an apartment credit check negatively affect your credit score?
There are two types of credit pulls, and each affects your credit score differently. A soft credit pull is typically what happens when you go to rent an apartment. Soft inquiries won’t impact your credit score at all because a soft pull isn’t coming from someone directly connected to a credit application of any kind. When you pull your own credit history, it’s also considered within the soft credit checks category.
A hard pull comes from a lender looking at your financial history because you’re applying for a new credit card or loan or asking to increase your line of credit. When a hard pull happens, your credit score can dip down a few points, which is really only significant if you’re right on the cusp of a credit score range. If you’re close, it’s best to wait to apply for that loan or credit card until after you’ve signed your lease.
What can I do if I don’t have good credit?
Having an apartment credit check turn up with lower results than you’d anticipated does not mean you’re ineligible to rent an apartment. Yes, a potential landlord may have a minimum credit score in mind and may worry if your credit check comes back lower, but you can take certain steps to convince them you’re good at paying rent no matter what.
There are a few ways to go about doing this, including:
- Offer more money upfront. This can include making a few additional rent payments in advance, as well as offering to pay a higher security deposit.
- Collect character references from a friend, employer or family member to show you’re responsible. You can also ask previous landlords to write a referral.
- Bring in a co-signer to ensure monthly rent gets paid no matter what. Just make sure you’ve set up clear parameters on how this relationship will work should you need help.
- Provide extra proof of your current financial stability including documents related to your gross income and not just your salary, although pay stubs help, too.
If pulling together extra cash, and making a gesture like a larger security deposit or extra rent upfront isn’t possible, you can also spend your next apartment search looking for potential landlords that don’t run credit checks at all. These units may still require some background information but won’t dig into the details of your available credit.
You can also look for a rental that’s only for a short period while you work to build your credit back up.
Building up credit scores
Once you’ve reviewed your own credit report, it’s possible to positively impact your score before a property manager needs to review it. If you start early enough, you can raise your score by paying down existing balances, paying bills on time, handling anything that has gone into collections and using a secured credit card.
You should also carefully look through the credit screening document to make sure there are no errors. If you find something that isn’t right, dispute it before an apartment credit check gets run.
Credit reports and renting go hand-in-hand
Although it’s stressful to think about what apartments look for on credit checks, don’t let it stop you from going for that perfect apartment. Make sure your credit check won’t dig up any surprises and do your best to manage your finances responsibly. Credit reports shouldn’t intimidate. They’re a positive that convinces your next landlord you’re the perfect renter.
Lesly Gregory has over 15 years of marketing experience, ranging from community management to blogging to creating marketing collateral for a variety of industries. A graduate of Boston University, Lesly holds a B.S. in Journalism. She currently lives in Atlanta with her husband, two young children, three cats and assorted fish.
