Assume for a moment you and another applicant are looking at the same apartment. You have a good score (700s), while the other guy has an excellent score (800s). Everything else, like finances, being equal, it would make sense for the landlord to choose the other guy with the higher credit score.
If you're dealing with a bad score or no credit score at all, you'll probably have a harder time renting an apartment. It's probably best to hold off until you can raise your score.
What is a credit score?
Your credit score is a rating, ranging from 300 and 850, based on the strength of your credit history. Your credit score is important for many financial reasons and when it comes to renting an apartment, landlords can use your credit score as a quick way to quantify how “risky” of an investment you are.
A high credit score indicates low risk and good payment history, while lower credit scores mean you might have to pay higher interest rates to offset the additional risks.
These five main factors determine your credit score:
- Payment history (35%): Your history of paying bills on time and if you’ve ever paid late or filed for bankruptcy.
- Amounts owed (30%): How much you owe in loans and outstanding balances.
- Average age of credit (15%): How long you’ve had your credit accounts for.
- New credit (10%): Recent credit card activity such as hard inquiries.
- Credit mix (10%): Your makeup of revolving and installment accounts.
What credit score do you need for renting an apartment?
Generally, you’ll want a minimum credit score to rent an apartment of 620 to 650. Landlords or property management companies want reassurance that you can pay your rent on time and you're responsible, and a solid credit history and excellent credit score are two ways to show this. The general range of FICO credit scores are as follows:
- Exceptional: 800–850
- Very Good: 740–799
- Good: 670–739
- Fair: 580–669
- Poor: 300–579
Although a score of 620 would be considered a fair credit score for renting, it's definitely not the best score you can get. If your credit falls in this range you may want to work to improve it.
What credit score do landlords look for?
So, what credit score is needed to rent an apartment? There's no single number, but just to give you an idea, you're probably going to need a 740 score or higher to rent in a hot rental market.
Landlords in desirable and competitive markets like San Francisco or New York may sometimes even require a minimum credit score to be able to rent in their buildings — and generally speaking, the higher the rent, the better credit you'll need.
Can you get an apartment with a credit score of 500?
If you have a lower credit score, then landlords see you as high risk and are less likely to rent to you. A score of 500 is considered poor, so you’ll likely struggle to rent an apartment — if your credit score is this low, you may want to consider getting a guarantor to sign the lease with you.
What other factors do landlords look at?
In addition to looking at your credit score, landlords also want to review your credit reports for red flags. Landlords want to be able to accurately assess the risk of renting to you, so they’ll likely look at more than just your credit score to rent to you. Other facts they might look at include:
- Late payments
- Accounts in collections
- Recent hard inquires
- Bankruptcy history
- High debt payment amounts (in comparison to stated income)
How to raise your credit score
If you want to raise your credit score before you search for an apartment, here are some quick tips to help you out:
- Pay your bills on time: Consistently paying your bills on time can help improve your payment history, the biggest factor in determining your credit score.
- Pay more than the minimum amount: To improve your credit utilization ratio, aim to pay off the highest amount you can (or the entire amount if possible).
- Don’t close old cards: Older credit cards can improve your average age of credit, an important factor in your credit score.
- Sign up for a secured credit card: Secured credit cards can help you establish or improve a low credit score for renting an apartment. Secured credit cards report to all three credit bureaus and your history will be included in your credit report.
- Don’t shop around: Each credit inquiry you submit is recorded, and too many in a short period of time can lower your credit score.
- Ask your landlord to report on-time payments: If you're currently renting, ask your property manager if they can report your on-time rental payments to the bureaus.
You might qualify for lower interest rates for credit cards, a mortgage, car loan or even that charming rental in that cute little tree-lined neighborhood if you have a higher credit score.
7 tips for renting an apartment with bad credit
If you don't have time to improve your credit score for renting an apartment, here are a few tactics you can also try to persuade your potential landlord to rent to you.
- Be prepared with the right paperwork: Print out your credit report and credit score. In addition, have your application filled out and bring recent pay stubs.
- Explain your history: If there are any blemishes on your report, explain why. Sometimes, a simple explanation goes a long way.
- Offer to pay in advance: If you can, offer to pay some of your upcoming rent (i.e., three months' worth) in a lump sum. This might help put your landlord at ease and make you a more desirable tenant.
- Find an apartment with no credit checks: Some landlords don’t require credit checks to rent an apartment.
- Provide a reference letter: Have someone you know in a professional capacity write a letter of reference to show your trustworthiness.
- Provide proof of employment: Showing financial stability and a solid source of income can make landlords more likely to rent to you.
- Have a cosigner or guarantor: If your cosigner or guarantor has a high credit score, it can increase the average credit score of all signers.
Monitor your credit score regularly. Some banks and credit card companies offer this service for free.
In addition, review your credit report periodically. The three bureaus provide a free credit report every year. Stagger the reports so you can check up on any suspicious activity, such as a credit card account that may have been opened in your name.
Monitoring your credit and working to improve it may help your chances of renting an apartment, especially if you want to rent in a big city.
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