What Credit Score Do You Need a Rent an Apartment?

Which credit score is used for renting an apartment

Credit QA: “What credit score do you need to rent an apartment?”

Like all things credit, nothing is written in stone here, but obviously the higher the credit score the better (what is a good credit score?).

Apartment shoppers should realize that not all landlords pull credit, but not bank on it.

And even if they do, they don’t necessarily have a certain threshold or particular three-digit number that they abide by.

Each landlord will have their own risk appetite and rules when it comes to credit scoring. In other words, you won#8217;t necessarily be barred from renting an apartment if your Fico score is below 620.

This differs from banks that issue mortgages, which typically have rigid credit scoring tiers in place that are pretty much black and white.

You either meet the credit scoring requirement or you don’t, with few exceptions.

All that said, there isn#8217;t a specific credit score you should aim for, but as a rule of thumb, shoot for the stars.

With regard to renting, you’re probably going to find more leniency with landlords if you seek out duplexes or guest houses, along with smaller complexes.

Landlords at larger complexes will probably pull your credit for sure and chances are they’ll be more meticulous (and experienced with reading credit reports).

So what if the landlord pulls your credit and finds that it’s less than satisfactory?

In that case, you may need to obtain a co-signer, such as a parent or family member with better credit assuming you fail to meet your obligations.

If that’s not possible, the landlord may ask for a larger down payment (security deposit) as a means to mitigate the higher risk, though this clearly isn’t ideal for the renter.

However, these days you may find that landlords are a bit more lax because they’re just happy to rent their units out in the face of a tough economy.

If you have no idea where you stand credit wise, you may want to order a free credit report before you start looking for an apartment to see if there’s anything negative on your report.

There’s also a good chance you can use that credit report in place of the one the landlord would order (assuming you opt to get the score as well), saving you a little bit of money on that application fee.

This could be especially helpful if you’re shopping around at different apartments and don’t want your credit pulled numerous times (and it could prove to be a good negotiating tool if you#8217;re going up against another candidate).

After all, it saves them the time and aggravation of ordering a credit report themselves.

If your credit score does happen to be low, you can still make an argument as to why you’re a solid candidate for the apartment, so don’t be discouraged.

Landlords Care About Rental History

Generally, landlords will be most interested in any rent-specific issues on your credit report. Or perhaps a past mortgage delinquency if you#8217;ve now been resigned to renting.

So if you#8217;ve got great credit, other than an isolated late payment on a store credit card or something similar, they may look the other way, even if your credit score is depressed as a result.

From their perspective, you#8217;re a good borrower overall, and you#8217;ve always stayed up-to-date with housing payments, so you won#8217;t be looked at as a huge liability.

Conversely, if there are signs of rental distress on your credit report, including disputes with former landlords, you may denied on the spot.

They won#8217;t want to deal with someone who couldn#8217;t get along with a former landlord, as such tenants tend to repeat their past behavior.

Colin created this blog after spending several years in a job that required him to scour credit reports on a daily basis. His goal is to help individuals better understand their credit and get the most out of credit cards. View all posts by Colin Robertson

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Not all landlords actually run your credit so just find one that doesn#8217;t if your credit isn#8217;t good.

What Are Credit Scores Used For?

Which credit score is used for renting an apartment

You’ve probably already heard that a credit score is very important to a person’s financial life. In fact, if you’re on our site, you probably already know that you need to improve your credit score. Most of the time, you might assume that credit scores are just used to get approved for a loan, but this isn’t the case. There are many other reasons why credit scores can get pulled. Here are some of the ways people and businesses use credit scores, and what you should know.

Credit Scores Are Typically Used As A Measure Of Trustworthiness In Loan Repayment

A credit report is basically composed of your history of paying bills on time, and of how well you are able to handle your finances. When someone is trying to lend you money, they want to see that you have a long history of paying other people back. They want to be able to trust you, because they don’t want to lose money by giving it to the wrong person. By having a high credit score, you show lenders that, yes, you will be able to pay back what you owe.

Landlords Use Credit Scores To Weed Out Potentially Bad Tenants

You may have also heard of landlords increasingly asking people about their credit history. This is actually partly due to the nightmare stories landlords have heard (or read about) dealing with tenant who will pay for the first month of rent, then refuse to pay rent for the rest of the time they are legally allowed to be in that apartment.

When such issues occur, the bad tenants don’t usually just stay there without paying they often wreck the apartment in the process. As a result, landlords are now more cautious about who they rent to, which is why credit scores are used. If an eviction, foreclosure, or judgment shows on a potential tenant’s record, they know what to be worried about. That's what credit scores are used for in both the apartment and mortgage industries.

Employers Use It As A Measure Of Responsibility

Paying your bills on time is one of the most basic responsibilities of being an adult, and employers love a responsible person being on their staff. In some cases, having a good credit score can also reveal other traits, such as financial prudence, foresight, and an overall good sense of what should be done in a variety of different situations. This is often why credit scores are checked by licensing boards before applicants can get a license.

Credit Scores Are Telling

It may not seem fair to some, but the fact is that there are good reasons as to why credit scores are used for a variety of different business transactions. Luckily, there are ways to improve credit. After all, everyone has a slip-up once in a while. If you need to rent an apartment, get a loan, or even gain employment, upping your credit score can do a lot of good. If you need help on figuring out how to do it, there are always people you can call on for help.

10 Facts Every Apartment Renter Should Know about their Credit Score

1. Credit Scores can Actually Range From as Low as 300 up to about 900

Although credit score can range slightly, most credit reporting sources have a range of about 300 to 900. Below you can find a credit score distribution according to FICO.

Which credit score is used for renting an apartment

As you can see, 58% of Americans have a credit score of 700 or above, while 42% have scores below this amount. Where do you fall in? You should know before you look to rent your next apartment. You can check your credit completely for free anytime on sites like Credit Karma. This site in particular includes your Equifax and TransUnion credit scores. Why not have a look if you haven’t checked in a while?

2. Most Lenders Require 720, with Some Requiring 740 and Above

Most people, at some time in the future, will need to secure a loan whether for auto or purchasing a home. How can you make yourself more attractive to lenders? Most will require at least a credit score of 720. But each lender has different criteria and some may want to see a higher score. As a general rule of thumb, a score at 650 or below will typically trigger a more in-depth look into your history.

Keep in mind that your credit score is just one of the factors that lenders take into account. There are a number of other factors they can look at to make a decision.

3. Apartment Renters can Overcome a Low Credit Score with Other Factors

Credit score is a big criteria landlords weigh when they see your rental application. So, what can you do if your score is low?

Make sure you meet or exceed the other criteria required by the landlord and you can still have a good chance of being accepted.

These items may include

  1. Be able to show multiple years of unbroken rental history with positive recommendations from your previous landlords
  2. Be free from any evictions on your record
  3. Have a monthly income that exceeds three times the monthly rent amount. For example, if the monthly rent is $2,000, make sure your total gross household income is $6,000 (or more!)

If worse comes to worse and you are still not accepted based on the landlord’s criteria, you may need to pay extra security deposit or have a co-signer ready with a good credit score who can vouch for you.

Which credit score is used for renting an apartment

4. Late or Missing Payments Aren’t the Only Ways you can Damage your Score

Making payments to your credit card on time is not necessarily enough to ensure that your score will stay high. There are many other common mistakes people make that hurt their score.

  1. A big mistake people make is having a high balance in relation to your credit limit. If your limit is $5,000 and you constantly are spending up to $4,800 each month this can have an adverse effect on your credit score.
  2. Another common mistake is maxing out your cards. Keep in mind that credit bureaus don’t look favorably on this because it means you are spending a lot in relation to your income.
  3. Having too many credit cards also can bite you. From a lender’s perspective, the more credit cards you have, the higher amount of debt you are able to put yourself into.
  4. Finally, too many hard credit inquiries can damage your score. Credit inquiries commonly occur when a lender runs your credit to evaluate you for a loan. Too many inquiries are an indication that you are unable to secure a loan from your first option and that you will likely take on more debt in the future.

If you avoid these common mistakes and show that you can continue to consistently pay off your current credit balances and loans, you will have a higher credit score.

5. Cosigning a Loan or Apartment Lease can Come Back to Bite you in a BIG Way

Be extra careful when you cosign a lease with someone else. You are doing more than merely vouching for the person. You are now personally liable for any issues with apartment rent payments or evictions that arise. Yes, this means if the rent doesn’t get paid the landlord can put liens on you. Cosigning will also damage your credit score if something goes wrong. By cosigning, you are agreeing to be responsible for the rent being paid for the duration of the lease. For this reason, always be sure you can trust the person you are cosigning for. And even more importantly, be sure you are ready to step in if they can’t cover the rent themselves.

Which credit score is used for renting an apartment

6. Holding a Joint Account with Someone with Bad Credit can Negatively Impact your Score

Think twice before you enter into a joint account with someone else who has less than stellar credit history. Their faux pas can spill over and negatively impact your own credit score.

7. You Don’t Have Just One Credit Score

Your credit score is not a single number. Depending on where you get your score from, you could have as many as three different scores representing your credit. This occurs because all of your financial activity is not always reported to all three credit bureaus. Also, the timing that this information is reported to each bureau may vary. For this reason, your score can be different depending on where you get it from. But rest assured all the sources will have moderately similar scores for you. That’s why some evaluators take an average of your credit scores from multiple sources.

8. Your Credit Score is Made Up of Three Categories

Generally speaking, there are three categories that go into your credit score:

The first is account info such as credit and loans. Second are public records on you like liens and bankruptcies, and finally there are credit inquiries that you’ve made. It’s important to realize that personal information such as address, age, gender, race, etc. does not impact your score.

9. Making Regular Rent Payments for your Apartment can Actually Work to Build your Credit

The action of just making monthly rent payment on time can build your credit score. This helps build a track record for yourself and shows that you are responsible enough to consistently pay your rent. The only caveat is that your landlord needs to report the rental history data to the credit bureaus. If your landlord isn’t doing this currently, services such as RentTrack can make this process easy. You can start improving your credit score with every rent payment you make.

10. Your Credit Score is Recalculated each Time it’s Pulled

Most people make the mistake of thinking that their credit score already exists and that each inquiry is allows you to see that number. But actually, the number is re-calculated freshly each time an inquiry is run. This means that the number can change each time the credit is run depending on the information available at the time. Even with this in mind, it’s not normally useful to look at your credit more than once per month. Look at your credit more frequently than this, and you are not likely to see any significant changes.

Which Credit Score Do Lenders Use?

Which credit score is used for renting an apartment

A few points up or down can make a big difference in your ability to qualify for a loan or other forms of financing.

A few points might also affect the interest rate you pay.

Knowing which credit score your lender uses could make a big difference when buying a house, car, or renting an apartment.

The rules for narrowing down the possibilities vary with each type of transaction.

Credit Scores Auto Dealers and Lenders Use

Car buyers might be very surprised to learn how many credit score variations they might encounter. There is no single right answer for every situation. You have to account for the different usage by car dealers versus the ultimate lenders, and then include auto industry overlays (which predict different behaviors), and bureau variations.

View Your Credit Score and Report. Unlimited Access. Just $9.95/Month with TransUnion! Obtain your consumer report, and examine the hard and soft inquiries on your file. This will tell you which lender uses which agency for your transactions.

Most car dealers do not make loans. Auto lenders and finance companies make the final lending decision. However, sometimes the car dealer makes an interim lending decision.

Once you enter a car dealer to look at purchasing a new or used car, that dealer wants you to buy from them, and not the dealer down the road. Dealers will often “spot” vehicles in order to close more deals. They let you drive away in one of their cars pending final approval from one of their preferred lenders.

Each car dealer may use one credit score for all spot deals to prequalify all buyers. There are about 15,000 car dealerships in the United States. Each one makes an independent decision.

Auto lenders and finance companies make the final lending decisions, whether the dealer spotted the car, or not. The number of auto lenders is much smaller, but overlays and bureau preferences also make it challenging to narrow down which credit score they might use.

Most auto lenders utilize custom overlay credit scores that differ from the general versions consumers see when they purchase them themselves. An “auto-enhanced” version predicts future performance on automotive loans, rather than all lending obligations. It is a more precise tool.

These enhancements vary depending upon which consumer-reporting agency was checked. Each lender has different business rules surrounding bureau preferences based upon geography, the perception of quality, price, and other factors.

Credit Score Home Lenders Check

Mortgage companies and home lenders check credit scores in unique ways. A home purchase is typically the largest single borrowing transaction any individual makes.

The stakes are very high, and lenders sell conforming mortgages on the secondary market. The federal government regulates sales of mortgage-backed securities and imposes rules.

One of those rules is the use of merged reports, and use of the middle credit score.

When buying or refinancing a home, you mortgage lender most likely will pull a tri-bureau merged consumer report. An intermediary company takes information from each of the big three consumer reporting companies and blends the data together into a single file.

Merged reports ensure that nothing slips through the cracks.

Each agency supplies a generic risk score. Each equation is fine-tuned to predict future delinquency using the data unique to that agency. The results cannot be blended together as with the information contained in the report.

The mortgage company has to pick one of the three. Most frequently, they throw out the high and low and use the middle credit score.

Credit Score Apartment Complexes Look At

Many apartment complex landlords look at much different credit scores than traditional lenders because they serve unique populations, and have other concerns.

Renters tend to have fewer or weaker financial credentials. Either they are just starting their careers, or they do not have enough assets to make a down payment on a home.

Landlords have different concerns than traditional lenders. Once a renter moves in, many laws protect the renter from eviction, even if they are very late in making rent payments. In addition, the property can suffer significant damage.

The choice of credit scores to look at often hinges on the occupancy rate of the multifamily dwelling unit.

Landlords for high-occupancy apartment complexes can be more choosy. Not only will their qualifying criteria be much higher, they may choose to spend more for a specialized credit score.

The CoreLogic SafeRent credit score combines traditional consumer report information with data from previous tenant histories and criminal public record files.

Landlords for low occupancy apartment complexes may have to show more flexibility. They still need to attract renters who may pay on time, but cannot afford to turn away too many applicants.

The PRBC alternative credit score can help prospective apartment renters to show a positive payment history even without a traditional consumer credit file. You can use utility, cable, rent, mobile phone, and other everyday bills to establish a positive payment history.

3 Tips To Getting An Apartment With A Low Credit Score

Which credit score is used for renting an apartmentby Calvin Russell, Jr.

Trying to get an apartment with a low credit score can be a tough task to complete. First, you have to find a landlord willing to accept a low credit score. Then second, you would hope that the neighborhood is worth your while and with affordable rent. Either way, you must yourself in the landlord#8217;s shoes and ask yourself, #8220;Would you rent to yourself?#8221; At the end of the day, or month for that matter, the only thing of importance is paying the rent on time. How can you show the landlord this before getting approved? Let me show you.

Tip #1: Get Your Credit Score

I know, I know. Why would you get your credit score when you already know how bad it is! That#8217;s the point. You see, what may be bad to you could be exactly what a landlord will accept. You can get your score for free through Credit Karma or pay for the exact score the landlord will see through MyFico. Either way, you will know where you stand and doing this will help you sort out apartments that your score may be too far out of reach for.

Tip #2: Show Me#8230;..I Mean, The Landlord The Money

Landlords are very flexible. They understand that a great tenant will soon move away or buy a home some day. They also understand that bad tenants, good credit or not, can be a difficult task to deal with. That is where you come in. During the interview process, whether over the phone or in person, spend a lot of time talking about how much money you make, how you budget your money, and the most important part, show the landlord that you are willing to put a bigger security deposit down. When prospective tenants put up more cash for the security deposit than originally asked for, the put themselves in a better position in obtaining the apartment. I have seen some tenants tell the landlord that if they are ever late, that will sign a document that would automatically fork over the entire security deposit. That may not be best for you, but if your score is low enough and you like the apartment enough, you will do just about anything to get it. Keep in mind, the point of doing this is get the apartment and pay the rent on time. Another way of doing this is showing the landlord your check stubs, W2, Tax Forms, Savings Accounts, or Bank Statements. Doing this will show that you are not your credit score and that things happen. Keep in mind that the largest monthly expense most people pay for is their living expense. With that being said, you must show that you can afford it on a monthly basis. You can also offer to pay a few months upfront if you can afford to it. You must be creative. Landlords love upfront money!

Tip #3: Have Your Previous Landlord Help You

Good landlords understand that people must move on in life. Of course, they would like to inform future landlords about bad tenants. But what most people are not aware of is that they are also willing to show other landlords how great a tenant can be. You can ask your landlord to write a letter of recommendation on your behalf, they can create a tally of all of your on-time rent payments, you can also ask them if they know of any other landlords with more upscale apartments or apartments in a different area.

Hopefully you can breathe a little easier now that you know the tips. I have seen these tactics work time and time again as landlords are people to and they do understand that people make mistakes. They just want to make sure that they are choosing the right person to pay them on time and keep from causing a ruckus. For more information on topics such as this one, be sure to keep up with my latest post and free tips.