There are lots of things you need to do when thinking about renting an apartment. There will be bills to pay for your new apartment, dates to keep track of, and responsibilities to take care of. However, if you have never applied for an apartment before, you may not be aware of the different requirements that come with—one of them being your credit score.
Landlords and property managers will look at your credit score to better understand how likely you are to make your monthly payments. Learn more below about credit scores in general, credit requirements for apartments, and how to improve your scores.
Different Places Will Have Different Credit Requirements
The first thing you should know about credit requirements and rentals is that each apartment will be different. Some landlords and property managers may be more flexible than others regarding credit for applicants, especially if an applicant can show their ability to pay rent each month. While other places may be very strict, having a minimum credit score requirement to even get your application looked at!
In general, most places you look at will likely ask for a “good” credit score. And to understand what that means, you’ll need to know how credit scores work.
What Is Considered a Good Credit Score?
The most common credit scores used are FICO credit scores. Here are the ranges for this model:
And so, as you can see, based on a FICO score, good credit is considered anything between 670 to 739. Anything above will only help your chances of getting approval for an apartment. On the other hand, If your credit score falls below this range, securing a place may be a little more complicated, but not impossible!
The average credit score for Americans in 2021 was 698, so even if you aren’t in the “good” category, know that you are not alone!
Is It Only My Credit Score That Potential Landlords Look At?
Your credit score is definitely one of the first things a landlord/property management company will check; however, they will also check out your credit report, usually from all three major credit bureaus.
And so, it isn’t just your credit score that will determine whether you can get an apartment. Your credit reports have your entire credit history—which will also be considered. Information from your credit history is actually what makes up your credit score.
Here are a few things lenders will check on your reports (some are not listed on them but are also important), along with your score:
Your Payment History
Your credit reports will have a payment history for all your credit accounts, so your credit card payments, loan payments, and sometimes past rent payments will show up. Landlords/property management companies will definitely take a close look at this information to get an idea of how reliable you are with your bills. If you have little to no late payments, it will show that you are responsible! Payment history is the most significant factor that impacts your credit score.
Amount of Credit Accounts and Debt
Another thing prospective landlords may pay attention to is the number of credit accounts and the overall debt you have. A lot of debt will cut into your income, which means less money to comfortably make rent payments depending on how much you earn every month.
Past Eviction History
Although past evictions will not appear on your credit reports, a simple background check—standard for tenant screening with a rental application—will show an eviction history. Even a single eviction on your record can be a huge red flag for prospective landlords and may mean denial to rent an apartment, even if you meet the other criteria.
Any past bankruptcies you have had will appear on your credit reports for up to ten years on the date filed (depending on the bankruptcy type). Although bankruptcies are not a certain denial, they may not look good to potential landlords.
If you default on your loans, credit cards, or other debt obligations, your lender may sell that account to debt collectors or debt collection agencies. If that is the case, collection accounts will also show up on your credit reports and be a red flag for potential landlords.
Accounts That Have Been Settled
Debt settlement is the process of talking to your creditors to come up with either a lump sum payment or new repayment terms. Settled credit accounts will also appear on your reports, and some landlords may be cautious of applicants who have these on their credit history.
The last thing a prospective landlord may pay attention to is the kinds of credit accounts you have. For example, having just credit cards can look pretty bad; it may allude to bad spending habits. On the other hand, having multiple kinds of debt like student loans, personal loans, car loans, and credit cards can show that you have a healthy mix of “good” and “bad” credit. Your credit mix also accounts for 10% of your credit score!
What Can I Do To Increase My Chances of Getting Approved for an Apartment With Bad Credit?
Getting an apartment with a low credit score is possible! But it may take some extra work to prove to your landlord that you can make timely rent payments. Here are some ways to show them just that:
If you have a previous landlord to whom you paid rent on time, asking them for a reference letter may be helpful. Depending on how you were as a renter, a recommendation letter may be the perfect supplement to get your application approved! If you have never rented a place before, a letter from your employer asking them for things like income verification and character traits may also help.
Provide Proof of Savings
An emergency savings account can show potential landlords that you will have enough money to pay rent in case your financial situation changes.
Show Proof of Past Rental Payments
You can pay rent in a few different ways including cash, a check, and electronically through a bank account. If you rented a place before and made rent payments electronically, you should be able to provide proof of payment. For example, if you paid rent straight from your bank account, you can use bank statements to show that you have made rent consecutively. This should help make up a fair amount for bad credit.
Get a Lease Cosigner to Rent an Apartment With Bad Credit
A cosigner can be added to your lease agreement if you do not qualify for an apartment on your own. Adding a cosigner ensures that if you cannot make your rent payments, another person will take over, or even pay off all balances if the lease is broken.
Provide Proof of Income
Income requirements are just as important, if not more important, than credit score requirements to rent an apartment. And so, when working with bad credit, it is essential to prove all of your income. Provide bank account statements, invoices, pay stubs, tax returns, etc. to show landlords that you can pay rent each month.
Things to Do for a Higher Credit Score?
Although there are definitely things you can do to increase your chances of approval with bad credit, improving your credit score will ultimately make it easier to qualify for all kinds of apartments.
Improving your credit score can take time, which not everyone has. Still, if you can hunker down in your current living situation for a few more months to work on your credit, you may find that the wait was worth it, especially if your local rental market is competitive.
Here are some small things you can do to improve your credit score in a short period of time:
Make On-time Payments
One of the best things you can do for higher credit scores is consistently pay your bills on time.
Look at Bad Credit Loan Options
It may sound counterproductive to seek loans or credit, but establishing a payment history requires having something to pay off. When you have bad credit or no credit, you will have access to loan options like payday loans, title loans, secured credit cards, bad credit personal loans, and credit builder loan options. Stay away from predatory loans like title loans and payday loans; the other options can help you build your credit if paid back on time.
Pay Off Your Debt
Credit utilization will significantly impact your credit score, especially with revolving credit accounts like credit card debt. And so, prioritize debt payment to see a good amount of improvement in your scores relatively quickly.
Become an Authorized User
When you become an authorized user on someone else’s credit card account, their activity will be reflected on your credit reports. Things like on-time payments can help your score.
Get All Your Bills Reported
If you don’t have access to credit, then getting your bills like phone bills, utilities, and rent reported will help build a payment history and, therefore, your credit.
Check Your Credit Reports
Finally, the last thing you can do to help your credit is to check your credit reports often. Sometimes errors or inconsistencies can really bring down a good credit score, and fixing them can help improve things.
The Bottom Line
There isn’t a set average credit score needed for apartments because every landlord is different. However, most landlords may ask that tenants’ average credit scores fall within the “good” range. The good news is that even if you fall below that, there are things like income and payment history you can show to qualify. Improving your credit score over time will also help you land your dream apartment!
What Is a Good Credit Score? — Experian