What Credit Score Do You Need to Rent an Apartment?
Although finding your dream apartment is an exciting experience, remember that renting an apartment is a business deal. It's up to landlords to ensure that they choose tenants that are a great fit.
That's why tenants can expect a thorough vetting process before signing a lease agreement. Ensuring that a tenant is financially stable and has a positive rental history is one of the crucial metrics of the tenant screening process.
That's where a credit check comes in.
Landlords perform credit checks because they provide essential information regarding debt to previous landlords, on-time payment history, and previous bankruptcies. In short, everything you need to determine whether a prospective tenant is likely to pay rent on time.
The three major credit reporting agencies, Equifax, Experian, and TransUnion, use a proprietary method to determine your credit score. These credit scores give landlords insight into your credit health.
Landlords and property managers often set a minimum credit score that tenants must meet to be considered as a prospective tenant for the vacant unit. However, that number can vary widely. That leaves potential renters scratching their heads, asking themselves,
"What credit score do you need to rent an apartment?"
It can be complicated. Luckily, we've got the answer. Here's everything you need to know about the credit score you need to rent an apartment.
What Credit Score Do You Need to Rent an Apartment?
Generally, you need a "good" credit score for landlords to consider you during the rental application process. Each credit reporting agency has its own range of credit scores they use to describe your credit: poor, fair, good, very good, and exceptional. So, "good" can vary depending on the credit reporting agency.
There aren't any real concrete cutoffs that indicate the difference between one credit score rating or another. For example, the difference between "good" and "very good" credit can't be determined by a single number.
However, there is a widely-used scale that measures these ranges. It's as follows1:
- Poor: 300 - 579
- Fair: 580 - 669
- Good: 670 - 739
- Very Good: 740 - 799
- Exceptional: 800 - 850
Typically, the minimum credit score required to rent is 650. However, that number can vary based on the market.
If you’re searching for an apartment in a competitive rental market, you may need a higher credit score and a higher income (use our rent calculator to determine how much you should pay monthly).
To determine your credit score, check it at AnnualCreditReport.com. Be sure to check before you apply. That way, you can avoid applying to apartments that you don't qualify for.
Keep in mind, landlords are free to choose the credit reporting agency they will pull your score from. At any given time, your score can differ between each of the three reports, sometimes very significantly. So, it's a good idea to ask about the reporting agency your landlord will be checking, and plan accordingly.
Why Do You Need a Good Credit Score to Rent an Apartment?
Nick Meyer, a certified financial professional and financial influencer, shared with us the relationship between credit and the apartment applciation process.
"Your credit score acts as your financial report card: it's a number that tells banks, landlords, and even employers how likely you are to pay off your debts. The lower this number is, the less likely landlords are to approve your rental applications."
@nicktalksmoney Reply to @victorgrabru What is a credit score?🤔💳 #credit #creditscore #personalfinance #learnontiktok #money
♬ Monkeys Spinning Monkeys - Kevin MacLeod
So what should you do if you have a low score?
What to Do If You Have a Low Credit Score
Everyone's financial situation is unique, and your credit score will reflect that fact. Whether you're recovering from bankruptcy or building credit for the first time in your life, there's a chance that you may have a sub-650 credit score.
Don't panic! A score below 650 doesn't mean that you'll never be able to rent your dream apartment. However, it’ll take additional effort on your part to make it happen. Here are some tips that will help you rent with bad credit.
- Be Honest: Don't make the mistake of trying to hide a poor credit score. Landlords will be performing an extensive screening on an applicant, including a credit check. They'll find out. Bringing it up to your prospective landlord before the credit check helps to give you a fighting chance.
- Explain Your Situation: As stated earlier, everyone's financial situation is unique. Knowing your credit score and reviewing your credit history means that you can explain the blemishes causing your poor score. This can be especially beneficial if these issues stem from mistakes made years in the past.
- Come Prepared: Though explaining your credit report's flaws might work to persuade your landlord to allow you to rent with them, it's providing proof that will drive your point home. Show up with paperwork showing proof of employment and proof of income. To take it a step further, bring bank statements and pay stubs. This shows your landlord that whatever your previous faults, you're currently in a much better place financially.
- Offer to Pay a Higher Security Deposit: Renting your property to anyone is a significant risk. However, landlords often see renters with sub-650 credit scores as a bigger risk. To mitigate your perception as a high-risk tenant, offer to pay a higher security deposit. As long as you’re timely with rent payments and respect the property, it's a no-risk move on your part since you'll get the deposit back at the end of your lease. Landlords see this as a sign of good faith. Win-win!
- Provide Plenty of References: You might be proficient at arguing your case. However, it's more convincing to hear from others who can vouch for you. Friends and bosses are often a good choice. However, the best choice is a previous landlord. If you have a good relationship with your previous landlord, ask them to be a reference for you. Landlord to landlord, their referral will carry more weight.
- Use a Cosigner: This is primarily an option for those who are new renters with no credit scores. However, anyone can use it. A cosigner takes on the responsibility of paying rent in the event that you’re unable to pay it. The requirements for a cosigner are generally much more strict. They must have a higher income, credit score, and more.
Should You Avoid No-Credit-Check Apartments?
Though it may seem like the easiest way to rent with a low credit score, so-called "no credit check" apartments are not a good option. Think about it. Landlords want to ensure that they're getting a high-quality tenant because they care about protecting their income and property.
You wouldn't lend thousands of dollars to someone who you don't believe will pay you back. Landlords avoid renting to prospects with poor credit because of the perception that they will default on rent payments. If a landlord is willing to take on that risk, there could be something fishy going on.
"No-credit-check" apartments are designed to attract renters who are facing difficulties or have few to no other options. These tenants are counterintuitively perceived as low-risk.
Landlords can take advantage of tenants by renting an uninhabitable apartment. They may provide little to no maintenance, high fees, and lax security. Though not all "no-credit-check" apartments are a scam, a fair chunk of them are. You should avoid them.
Quick Tips for Improving Your Credit Score
A surefire way to increase your chances of renting with a low credit score is to improve it. That said, it's not something that you can do overnight.
This is especially true for those with a long-standing history of non-payment or late payments of debts. It can take years to fully repair a credit score. However, all hope is not lost.
There are some things that you can do in the short term to improve your credit score. Here are some quick tips to raise your credit score.
- Don't Close Old Cards: This is often the biggest mistake that people make when trying to improve their credit score. Though you may have older cards that you simply do not use, it's better to keep them open. Older cards contribute to the average age of your credit. So, the older your accounts are, the better.
- Pay What You Can...Often: It's unlikely that you'll be able to pay all your debts off at once. Paying as much as you can in small increments and meeting the minimum monthly payment for each of your cards is essential.
- Call Your Credit Card Issuer: If you’re able to successfully negotiate a higher credit limit with your card issuer, the percentage of credit used can go down significantly. As this is an important factor in your credit score, it can be the one change you need!
- Increase Your Credit: Another counterintuitive method for improving your credit score, diversifying your credit can improve your score. A mix of loans and credit cards are ideal. Even opening another credit card can have a positive impact!
Are Landlords Looking at Credit Scores or the Whole Report?
Credit scores alone can present an unrealistic picture of a prospect's financial status and history. By viewing your entire credit report, landlords can take a deep dive into your credit history.
Your credit score is impacted by payment history, the type of accounts you have, recent activity, and the length of time you've had your accounts opened.
Simple things such as opening a new credit account or missing a single payment can have a significant impact on your credit score. Your score may dramatically over the course of a month.
That said, a low credit score will rarely be enough to completely remove you from consideration as a prospective tenant. However, the additional information on your credit report must indicate your financial stability and ability to pay your rent on-time.
What Landlords Look for on Credit Reports
In addition to your credit score, credit reports contain essential information related to your financial habits and history that landlords may review, including:
- Debt to Income Ratio: This metric shows the amount of your monthly pre-tax income that goes toward debt payments.
- Credit Card Balances: Landlords will look to see whether you are carrying high balances on your credit cards.
- Bankruptcies: If you've ever experienced a bankruptcy, it will appear on your credit report. Unfortunately, it’s very difficult to explain bankruptcy, so it may diminish your chances of renting successfully.
- Rental History: Some landlords and rental property managers will report your rent payments to credit bureaus. You can even request this service online. If you have low-to-no credit, this is a great way to demonstrate that you have a history of paying rent on time.
Final Thoughts
Searching for apartments can sometimes feel like you're in the midst of a very taxing hoop-jumping routine. From researching your credit score to determining what you can afford in rent, there's a lot to know before you even get started on your search.
That said, once you make all the necessary preparations, it's time to find your dream apartment. However, finding an apartment that meets all your needs is challenging. When you're looking for a lower rent cost or a decent apartment in a great neighborhood, you have to spend hours doing the sorting and sifting yourself
Apartment List does the work, so you don't have to. Simply enter all the parameters that you need your apartment to meet, and hit submit. Start your apartment search using the quiz above!
Frequently Asked Questions
What credit score do you need to rent an apartment?
Typically, the minimum credit score required to rent is 650. However, that number can vary based on the market.
How can I improve my credit score?
Don't close your old credit cards, pay off what you can and often, increase your credit card limits, and diversify your credit mix.
What do landlords look for on credit reports?
They look at your debt to income ratios, credit card balances, bankruptcies, and rental history.
Do apartments check credit scores?
Yes, they do. Typically, the realtor or leasing agent will ask you to provide a credit report, or they'll run a credit check on you.
Can you get an apartment with a credit score of 500?
Typically, tenants need a credit score of 650 or higher. If you have a score of 500, we recommend that you co-sign with someone with higher credit or apply for no credit check apartments.