How does my credit score affect renting?

TLDR:  

If your credit score’s 650 or higher, you’ll be eligible for the best deal on a new pad. If it’s lower, say goodbye to breaks and special promotions.

Full Question and Answer

Renter's Question

debt-managementIt’s been hammered into me ever since I got my first credit card that I need to make sure I have a good credit score. I’ve had a few slip-ups here… with one card going into collections a few years ago, but have since tried to be responsible and put in minimum payments on credit card debts, though my cards are nearly maxed out. I’ve been looking for an apartment and have applied at a handful of places, having paid for a credit pull for each application, and have yet to be approved… I’m hoping it isn’t my credit score that’s preventing me from signing a lease. What are landlords looking for in a credit report or score with applicants?


RadPad's Answer

Harsh reality check: your credit report and credit score can actually make or break your chances of getting a good deal on a new pad, or even getting into a pad. That landlord doesn’t know you, and just because you promise you’ll pay the rent on time doesn’t mean she’s going to take your word for it. Your credit score can give her a pretty good indication of how responsible you are when it comes to paying bills—and a low score puts her on notice that you’re perhaps in over your head, or that when you get into a tight spot you prioritize other things (like eating, for instance) ahead of paying debts on time.

If you’ve been keeping track of your finances and making sure you have a healthy report and score, you’re a step ahead of people who don’t when it comes to renting a new pad. Many landlords consider 650 the magic number, and if your score’s higher than that, then you’re likely in good standing to actually land that apartment.

If you live in an area where there’s a rental shortage, your credit score can become an even bigger deal. When landlords are looking at as many as 20 applicants for one apartment, they might ratchet up their minimum required score to over 700.

c75eb68f1b932e3f00a4c4066aa50bf710e0acd60d7bb0de6b41c9b45b7bceddSince you’ve had a few slip-ups like letting a missed credit card payment go over 30 days unpaid, you might want to take a look at how that’s impacted your score, and if there’s anything you can do to boost it a little. There are numerous free online resources to check your credit scores, like Credit Karma or Quizzle, as well as AnnualCreditReport.com, which is a federally mandated website that provides your credit report from each of the three major reporting agencies once per year.

At the same time, look at whether those are things you could explain to a sympathetic landlord. Maybe you lost your job or were in a car accident, and got a little behind on things as a result. Landlords are people too, and they may be understanding if you have a reasonable explanation for your rough patch. But really, if they can’t understand that you got a little behind on your credit card payments because you were laid up in the hospital with a broken neck, you probably don’t want to rent from them anyway.

If your credit score doesn’t surpass the magic threshold, suffice to say you probably won’t be eligible for any of those great move-in specials advertised on bright banners hanging off the side of the building. You should also be prepared to pay a larger security deposit or get a more credit-worthy friend or family member to cosign.

Renting with a month-to-month lease? You’ll be shocked to find out how often your landlord can raise your rent.

Here’s a list of super important questions to ask a landlord before signing a lease.

Thinking about getting a pet? Just know a landlord will likely want an additional security deposit.

 

Sources

http://www.nolo.com/legal-encyclopedia/free-books/renters-rights-book/chapter1-3.html

http://www.foxbusiness.com/personal-finance/2013/01/23/how-to-rent-with-bad-credit/

http://www.financialsamurai.com/landlords-need-a-credit-report-score-for-apartment/

http://money.usnews.com/money/personal-finance/articles/2012/07/09/how-to-rent-an-apartment-with-low-or-no-credit

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