Renting with Poor Credit – Part II
So, what is the landlord really looking for on your credit report and what does it take to pass the credit test? This is a question that comes up frequently among those with bad and good credit alike. In this post, we share what we’ve learned over the years from talking to property owners and managers about their perspective on the credit check.
Landlords tend to develop their own renter selection criteria based on experience and characteristics of their local market. There are certainly some landlords who rely solely on the credit score and feel it’s the one best indicator. However, many landlords read the entire credit report to try to understand the source of any lower than average credit score. Especially in markets where there is a large supply of vacant property rentals and fewer qualified applicants, landlords may tend to be more interested and understanding of the reasons behind poor credit.
If a landlord looks further than just the score, they are likely looking at any collections, civil judgments and your payment history. Having collections from utility companies on your report is a bad indicator for many landlords. This is the simplest extension of credit and if you can’t pay your utility bills, you likely cannot pay the rent.
Things that are of even bigger concern are:
- Garnished wages
- Credit collections
- Poor payment history
- Any discrepancy between the information on your application and the credit report
Some issues which may be of less concern to your landlord, or for which they might be more understanding include:
- High medical bills
- Student loan debt
- Too many credit cards
However, there are really no guarantees when it comes to credit checks. The best anyone can do is to be up front and honest about the source of their poor credit and find out if the landlord will be understanding or not.
As for the exact credit score that is too risky to bet on, there isn’t any one answer. Generally speaking, landlords want to see you near or above the average—which is about 670 nationally—but the average varies by specific market, and that is the more important figure. It also depends on the number of applicants you are up against and what their credit scores as well. However, as we’ve discussed, it’s all at the discretion of the particular landlord with whom you’re dealing and the reasons behind lower than average credit. Some landlords say they will hold out for a 700+ score until they are desperate to fill the unit and others will tell you that some of their best tenants are those with horrible credit scores that were easily explained by life circumstances.
If you are concerned about your credit, make sure you understand your credit score and what’s on your credit report so you aren’t blind-sided should your application be denied during your apartment search for bad credit. Knowing what’s in your credit report in advance will help you prepare for those uncomfortable conversations you may need to have with prospective landlords. If you have been searching for rental properties but not having any luck due to your poor credit, our next post in this series will give you some ideas for what to do next.
If you missed Part I of Renting with Poor Credit, click here.