How to pass a rental credit check successfully

Why do landlords require an apartment credit check?

Though it may seem like overkill considering all the other documents required in an apartment rental application, the credit check is standard, and it's one of the most important parts of a tenant's background information. Maintaining a property is very expensive, and finding new tenants is a stressful and time-consuming process, so landlords typically check credit scores.

By conducting thorough background research upfront, landlords can ensure that they find responsible, financially stable tenants who will consistently pay rent on time each month. Otherwise, landlords and tenants might find themselves in the middle of eviction proceedings, which is painful for everyone involved.

What information does a credit check for rental applications contain?

Most landlords partner with one of the three major U.S. credit bureaus: TransUnion, Experian, or Equifax. Some landlords also utilize companies like Rent Butter. These background checks will reveal much more about a prospective tenant than just their credit score; the goal is to discover any suspicious financial activity in the applicant's background. What you'll find on a rental credit check includes:

• Employment history
• Social security number verification
• Credit score
• Payment history
• Fraud indicators

When analyzing this information, landlords look for several red flags that could indicate the potential tenant may struggle to pay rent regularly. These red flags include:

• Chronic late payments
• Low credit score
• History of evictions
• Bankruptcy declarations
• Utilizing too much of your available credit

Learn more about this process with this guide to rental credit checks.

Pro Tip

Most rental application credit checks are soft inquiries, meaning they won’t negatively impact the applicant’s credit score. Hard inquiries are used when opening lines of credit, such as a mortgage or other loans, and many of them will hurt the borrower’s score.

What is the minimum credit score to rent an apartment?

The minimum credit score needed to rent an apartment varies from location to location. Wealthier, more competitive areas will require a higher minimum score, as will new or luxury buildings. However, a good rule of thumb is that most landlords look for a credit score of at least 600. Anything under 600 is considered bad credit, but don’t worry. There are many ways to overcome bad credit.

Additionally, if you do want to rebuild your credit, some rent reporting services enable you to build your credit score through on-time payments.

4 steps to renting with bad credit

Just because you have a low credit score doesn’t mean you’re out of luck when it comes to renting a nice place. There are steps you can take to showcase your strengths on your rental application. It’s all about demonstrating to the landlord that you would be a responsible and respectful tenant, making you a valuable investment for them.

1. Find a cosigner: The surest step you can take to getting approved is to have a cosigner or guarantor sign the lease with you. This person will be legally responsible for paying your rent if you are unable to, which will grant the landlord peace of mind.
2. Offer advanced payments: To demonstrate your seriousness about renting the apartment, consider offering to pay the first month's rent in advance. This early payment demonstrates your financial stability and incentivizes the landlord to remove the unit from the rental listing website.
3. Offer more money: Although this isn't an ideal solution, you can consider offering to pay a slightly higher monthly rent than initially asked or to pay a double security deposit. Offering more money upfront is a good way to show you're serious about both parties' investment.
4. Leave a paper trail: Craft a narrative about your financial and job history to show the landlord that you are living a financially responsible life. Even if your credit score is low due to student loan payments or other financial obligations, you can provide more documentation than required to demonstrate how you've kept up on payments and reduced your debt. A great way to demonstrate your ability to pay is by showing proof of income.

Apartment credit check scams landlords should watch out for

Though the rental credit check is meant to protect landlords, there are ways applicants try to get around this process. Landlords, here are a few red flags to watch out for, and tenants, here are a few moves you definitely shouldn’t try if you want the landlord to take you seriously.

• No previous landlord references: This point is situational, so landlords should use their best judgment when deciding whether or not the lack of references signifies a red flag. It's one thing if a new college grad doesn't have any past references. However, it could be suspicious if a middle-aged applicant were unable to provide any references. It could indicate something went wrong with their last rental, but it could also mean someone is transitioning from long-term home ownership to renting.
• Multiple occupants but only one on the lease: A major red flag is when there is one rent-paying adult on the lease, but multiple adults living there. This suggests that the other occupants may have undisclosed issues in their background checks that wouldn't pass inspection.
• Cash payments over checks or direct deposit: If an applicant insists on paying rent only in cash, it could imply that they are having financial issues. As a result, they might not be able to open a bank account, or the money might be coming from illegal activity. Again, use your best judgment in these situations. It's possible your tenant is just eccentric or old-fashioned.

How to pass a rental credit check FAQs

Below are the answers to a few of the most commonly asked questions when it comes to passing an apartment credit check.

Can I get an apartment with a 500 credit score?

Though this is below the recommended minimum of a 600 credit score, you can still get an apartment with a 500 credit score. You may not be able to rent the apartment of your dreams until your credit improves, but you can find a good home to rent by highlighting your other application assets. This includes showing the landlord steady payment and employment histories, along with utilizing the help of a cosigner on the lease.

How can I convince my landlord to let me rent with bad credit?

Again, you will need to prove to your landlord that you would be a solid investment for their property, even with a subpar credit score. You can do this by highlighting the work you’ve been doing to reduce your debt through detailed documentation, along with offering to pay a larger security deposit.

How can I rent with an eviction history?

Having an eviction history is one of the trickiest red flags to work around because it will make other landlords believe you are a bad renter. In this case, the more information you can provide, the better.

Explain the situation to your landlord in an application cover letter, highlighting improvements you have made to your financial situation and steps you are taking to live more responsibly. Again, you will probably not be able to rent the apartment of your dreams, but a reasonable landlord will be understanding if you can make a good case for yourself.

How long does it take to hear back about a rental application?

In most cases, it should take two to three days for you to hear back about your application. During this time, landlords are pulling the data from your credit check and analyzing it for any issues, along with reading through the rest of your application materials. In high-turnover markets in major metropolitan areas, the application turnaround time can happen in just a day. If you believe your application is taking longer than expected to be reviewed, you are welcome to contact your agent or the landlord directly.

Unfortunately, there’s no surefire way to raise your credit score in a matter of weeks. This is one issue that takes time and dedication to see results. Make sure you are practicing financial hygiene by keeping up on all monthly bills. Avoid spending on credit cards, and consider increasing your credit card limit to reduce your utilization rate.

The best way to raise your score is to request a credit report from one of the three major credit bureaus (TransUnion, Equifax, and Experian) and do a deep dive. Clean up any outstanding accounts so that your record is positive. Remember, you are entitled to one free credit report per year by law.

This story was produced by TurboTenant and reviewed and distributed by Stacker.