Rental Credit Checks: Everything You Need To Know

Last updated 04/08/2024 by

When you find a rental that fits your budget and requirements, you want to make sure your application floats to the top of the pile. Landlords and property management services want someone who will pay rent on time, won’t cause trouble and will keep the place in good condition.

A credit check is one of the tools landlords use to screen rental applicants. A 2014 study conducted by credit bureau TransUnion, found that 43 percent of landlords surveyed use credit checks as part of their leasing process. In other words, bad credit might keep you from the place of your dreams, and good credit can help you stand out.

Here’s an overview of why your credit matters and what landlords might look for when reviewing your application.

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Your credit history can matter as much as your credit score

Landlords sometimes separate applicants by their credit scores, but your credit report can be even more important. Casey Fleming, author of “The Loan Guide: How to Get the Best Possible Mortgage,” manages rentals in Albuquerque, New Mexico and looks for, “the story the report tells.”

“If there’s a pattern of weak credit over a long period of time… then even if they’ve brought their credit score back up I won’t rent to them,” said Fleming.

On the other hand, Fleming isn’t bothered if a single life event, such as a divorce or illness, led to derogatory marks if the applicant has an otherwise good record.

Landlords like Fleming want to know the details contained within one of your credit reports, not just the resulting score.

Your credit reports keep a record of late payments, foreclosures, evictions, bankruptcies, and other derogatory marks from the last 7 to 10 years. Your report also has positive information, such as on-time payments, and identifying information, such as your Social Security number and date of birth.

Mindy Jensen, community manager for the real estate investing social network and information site Bigger Pockets, also emphasizes the importance of your report.

“A past eviction is the kiss of death to most landlords,” said Jensen.

However, “some [landlords] will take into consideration the timing of that past eviction.” If the eviction happened years ago and you have a valid reason, you could still be a strong candidate.

Be upfront about past mistakes

Check your credit reports for negative marks before sending off a rental application. You can order a free credit report from each national consumer credit reporting company (Equifax, TransUnion, and Experian) once every 12 months at AnnualCreditReport.com. Several companies also give you free access to your credit report throughout the year.

Review your credit reports for potential red flags and write down explanations that can help ease a landlord’s worries. You might want to offer explanations with your application rather than waiting for the landlord to ask. For example, you could have a maxed out credit card because you consolidated credit card debts onto a balance-transfer credit card with a zero percent interest rate offer. That could show financial prowess rather than an aptitude for overspending.

Holly Porter Johnson and her husband Greg, owners of the ClubThrifty personal finance blog and rental properties in central Indiana, take these explanations to heart when considering applicants.

“We do run a credit check,” said Johnson, “but are generally accepting of past mistakes if renters are forthcoming from the start.”

The Johnsons also place a lot of value in a strong reference from a previous landlord.

Start working on your credit ASAP

In addition to preparing explanations of negative marks, you can start taking steps to improve your credit. Not only can a higher credit score help make the rental process easier, it may save you lots of money if you decide to buy a home later and need to take out a mortgage.

There are five major factors that influence your credit score. The two most important are your payment history and the amounts you owe. (Source) Make a habit of always paying bills on time, even when you can only afford the minimum payment. Also, try to only use a small portion of the credit that’s available to you. For example, if you have a credit card with a $5,000 limit, try to keep the balance below $1,500. (Source)

What else do landlords want to see?

Property managers and landlords can order screening reports to compare applicants. The report often contains your credit history, a criminal background check, an eviction report, and other background information. You might also be asked to submit a bank statement, pay stub, and previous landlords’ contact information with your application (source).

Paying rent with a credit card may seem like an unusual choice, but it can offer several benefits to renters who are looking to maximize their rewards and earn cash back or other perks. Here is our list of the best credit cards for paying rent every month

How can you improve your chances if you have poor credit?

A clean criminal background check, job stability, a high income compared to the rent, large savings, and positive references from previous landlords are all important. If you have all of that and a low, or no, credit score, you could still be a great rental applicant. You can also pre-empt objections by including letters of recommendation from previous landlords or employers in your application.

If you’re struggling because of your credit, a roommate who has good credit could ease a landlord’s worries. Asking a friend or relative to co-sign the lease is another option. However, be cautious about who you ask. If you’re unable to make a payment, the co-signer will be responsible for the debt.

There may be financial fixes to your credit problems as well. For example, putting up a larger security deposit, paying several months’ rent in advance, or paying the landlord with automatic bank transfers. Or, if you really want the apartment, agree to pay slightly more in rent.

Bottom line – your credit matters

Your credit report or score could make or break your application. Be prepared to offer explanations for negative marks on your credit report and start taking steps to improve your credit score. Also, remember that your credit is only one factor that landlords consider. A strong co-signer, letters of recommendation, and demonstrating a willingness and capability to make rental payments on time can be just as important.

FAQ on Rental Credit Checks

Is a rental credit check a hard inquiry?

Many landlords pull your credit report when you’re approving your rental application. The hard inquiry that comes from a credit check can affect your credit score.

What do estate agents check when doing a credit check?

Landlords and letting agents can carry out an Experian tenant check. This can include information from your credit report along with employee and landlord references, and affordability checks.

How long does a credit check take for renting?

A credit check for renting can take anywhere from a few minutes to one week. Most of the time, the delays are caused by the agent having to wait on a third party (for example an employer or previous landlord) to reply.

What is the minimum credit score to rent an apartment?

Most individuals or companies renting an apartment want credit scores from applicants to be 620 or higher. People with credit scores lower than 620 may indicate a high risk of default on rent owed. A lower credit score could mean you’re less likely to be approved for the rental you want, especially if you’re looking to rent in a popular area.

Do all apartments check credit?

Most apartment complexes and management companies require a credit check. However, some individual owners will let you rent without established credit. Generally, these landlords will still ask you to prove income stability.

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