Renting an apartment in today’s world can be challenging because of the high price and competitive real estate market. This is why you need every advantage you can get to help you secure your desired rental. Credit scores are one of the main factors used by property managers and landlords to evaluate potential tenants.
If you’re in the market to rent an apartment, it is important to note that many landlords and property managers often run credit checks to determine whether you’ll make a good tenant. This means your credit score can affect your ability to rent your dream apartment, especially in competitive real estate markets like New York or San Fransisco.
This article will explore what credit score is good enough to rent and how you can rent with low or bad credit. It is important to note that there is no exact credit score that determines whether or not you’ll be able to rent. A 643 credit score falls within the “fair” credit score range for FICO and VantageScore, and it could be a good enough credit for some landlords and property managers.
What Credit Score Is Good Enough To Rent
You must understand that what passes as good credit to rent varies from landlord to landlord. It can also vary based on the location and condition of the rental property. Rental property in bad condition and in a bad location won’t usually seek very high credit scores from tenants. However, sophisticated rental property in a high-rise neighborhood is bound to seek high credit scores from tenants to rent.
Most landlords and property managers will prefer you have a credit score of 670, which is “good” in the credit scoring range when applying to rent an apartment or property. So a 522 credit score will not lean the rental approval in your favor. While low credit scores don’t mean you can’t rent an apartment, they serve as red flags to landlords.
Generally speaking, the higher the rent you have to pay, the higher the credit score you’ll need to have. Property managers in competitive real estate markets like Seattle and New York might require a higher credit score to rent their buildings. For example, a 750 credit score is more likely to get you a rental application in New York than a credit score of 680.
How Does Credit Affect Your Ability To Rent
Most leasing agents and potential landlords run credit checks on potential tenants to help assess the tenants’ financial situation. With your credit score, a potential landlord can evaluate how responsible you’ve been with finances in the past.
When potential landlords check your credit history, they likely won’t focus on your credit score. They might not even care about your credit score and focus more on your overall credit history, especially your ability to make on-time payments. By focusing more on your record of on-time payments, your potential landlord is trying to assess the likelihood that you’ll pay your rent on time.
Good credit history and score will make the landlord’s decision lean in your favor. But a lackluster credit score and history will make the landlord take a closer look at you and demand additional assurances like a higher security deposit.
What Factors Affect Your Credit Score
The most popular credit-scoring companies, VantageScore and FICO, calculate your credit score based on data found in your credit reports. These companies might have different approaches to scoring your credit, but they use the following factors to determine your score.
Your Payment History
Payment history is the most crucial factor in the credit scoring system, making up 35% of your credit score. Something as trivial as a missed payment can negatively affect your credit history. So you must ensure all your bills are paid on time to maintain a good payment history.
Your Credit Utilization Ratio
This is the second most crucial factor in the credit scoring system. It measures the amount of credit you use against the amount of credit you have available. Your credit utilization ratio is one of the things you can quickly change to hurt or improve your credit score. It also makes up 30% of your credit score.
Ensuring that your payments are made on time is good, but maxing out your card hurts your credit score by increasing your credit utilization ratio. Ensure you don’t use more than 30% of your available credit.
Length of Your Credit History
The time you’ve used your credit also contributes to your credit score. This is where your old credit accounts come in. It might be tempting to close up these accounts, but they help to contribute to a high credit score. Older credit card accounts with low balances and on-time payments positively affect your credit history.
Be reminded that when you open a new credit card account, you hurt your credit score. You might notice that your credit score dropped 100 points after opening credit card accounts. This is why you should keep your old accounts active for as long as possible. The length of your credit history makes up 15%of your credit score.
Your Credit Mix
Individuals with high credit scores have a diverse portfolio of credit accounts, often consisting of student loans, car loans, mortgages, or credit cards. Most credit scoring systems consider the types of credit accounts and their number as a sign that you can manage many credit products. Your credit mix accounts for 10% of your credit score.
Newly Opened Credit
Lenders review your credit scores and reports every time you apply for a new line of credit. They can make a soft inquiry (soft pull) by retrieving your credit info or a hard inquiry (hard pull) by checking your credit information. The number of hard pulls lenders make when you apply for new credit, and the number of new accounts you’ve recently opened make up 10% of your credit score.
How Can You Rent With A Low/Bad Credit
The following are steps you can take to rent a property if you have bad credit or no credit at all.
Consider Getting a Roommate
Getting one or two roommates with good credit history can increase your chances of getting rental approval. Living with a person and sharing the rent with them will convince the landlord that you’ll be able to cover your part of the rent since the financial burden is shared.
Provide Exceptional References
Landlords are ultimately looking for renters they can trust to pay the rent on time and keep the apartment in good condition. If you’re on the lower credit-scoring scale, providing the landlord with stellar references from previous landlords can vouch that you pay your rent in full and on-time. You can also present references from work colleagues or employers who can attest that you are an upstanding citizen who will follow the rules and respect the rental property.
Be Honest About Your Credit History
Suppose you’re working with an individual property manager or landlord. In that case, you can explain why you have negative information on your credit report, what the negative parts mean, and the steps you take to improve and build your credit. The explanation can go a long way in convincing the landlord to take a chance on you.
Get a Lease Co-signer
In a competitive real estate market, bringing in a lease co-signer might be your final push to get that rent approval. You might need a lease co-signer if you have no credit or your credit is too low to rent. Be reminded that your co-signer will be placing much trust in you as they will be on the hook if you don’t pay your rent.
Offer To Make More Upfront Payments
You can entice your landlord with the offer to pay more than your security deposit and first month’s rent upfront. This shows the landlord that you’re serious about the rental property and have the financial planning capabilities to save money. Ensure that you can afford this upfront payment from your budget. You don’t want to become stranded and unable to pay your rent later.
Consider Building Your Credit Before Applying to Rent
You might need to pause your apartment search if credit issues give you more rental rejections than approvals. Only consider this route if you can afford to put your move on hold. A year of paying late bills, paying down debts, and making on-time payments can help you boost your credit score. Take time to map out strategies to build up your credit.
You can also consider using credit repair software to repair your credit and raise your credit score. Try the software at CreditUp Club. CreditUp Club’s software acts as an advanced DIY credit repair software by letting you be involved in the repair process. This software is one of the best credit repair software for professionals and beginners.
Summary
Your credit score is ultimately just one of the factors property managers and landlords use to determine whether or not to accept your rental application. While you’ll likely need a 670 credit score or higher to rent an apartment, remember there’s no fixed credit score for renting an apartment.
Browse through the article to see the good credit range to rent an apartment. Being a model tenant will make it easier for you to get rental approval should you need to move in the future. Ensure you make your rent payments on time after renting your apartment.
At CreditUp Club, we help you manage your open accounts regarding your credit cards and take you through the entire process of repairing your credit. Take a chance on our club today.
