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What credit score do you need to rent an apartment? It depends on many factors. Knowing what potential landlords are likely to expect can save you the heartache and embarrassment of being turned down for a lease.
- Less-expensive rentals require 600 to 620 FICOs
- Premium, more expensive apartments and homes require 740 or higher
- Some landlords don’t check credit. Or, you can be a roommate without a credit check if credit is a concern
Fewer than half check renter credit
Back in 2014, credit bureau TransUnion asked a sample of landlords whether they check a prospective tenant’s credit score when renting a home. Surprisingly, fewer than half (43 percent) said they did so.
However, that statistic may be seriously misleading. To start with, four years is a long time in real estate, and that number may well be way out of date.
More importantly, big landlords and rental management companies often have portfolios of hundreds or thousands of homes. They are more likely to verify credit than their smaller counterparts. But they count as one landlord in this survey, the same as an individual who rents out just one home.
In other words, had TransUnion analyzed the number of leases rather than the number of landlords, that 43 percent might have been much, much higher. So don’t be surprised if most or all your applications to rent a home come with a credit check.
Avoiding credit checks
It may not matter what your credit score is. How likely that is will depend mainly on two factors:
- How big the landlord is and whether a rental agency is used
- The sort of home you’re renting
If you establish some personal connection or can show that you are perfect by providing references and pay stubs, you increase your chances.
Small landlords often less credit-conscious
Any landlord is free to run credit checks, and many smaller ones do. Small landlords make their own decisions about renting to an individual. Some take pride in their ability to judge character and prioritize that over any external information. Even if they know someone has poor credit and past evictions, they may be open to persuasion that a second chance is due.
That is often very different from a big corporate landlord or a rental agency. They usually have iron rules and fixed criteria that must be met by tenants before approving a lease. Those generally include a minimum credit score, though that may vary from property to property.
You’ll know if they plan to check your credit because first, you must sign a form authorizing the process. However, that permission may be buried in a rental application — read everything you sign.
Lower rents, lower credit requirements
As a rule, the higher the rent, the higher the credit score you’ll need. That’s just common sense.
After all, the landlord is putting more money on the line when she trusts you with an expensive home. It’s only natural she’ll want to verify that you have a good record for making prompt payments consistently.
However, the converse applies. Landlords operate in marketplaces. If they’re requiring a minimum credit score of 700 for very basic accommodation in less desirable areas, they’ll end up with a lot of vacant homes. There’s nothing landlords hate more than their properties not earning them money.
So, what credit score do you need to rent an apartment?
If you research this further online, you’ll likely find mentions of landlords wanting minimum credit scores of 600 or 620. According to FICO, the company behind the most widely used scoring systems, those scores are within the “fair” credit range. That’s a bit below average.
That 600-620 is perhaps a good baseline for you to guesstimate the score you’ll need. If you’re looking to rent at the bargain-basement end of the market, you might get away with a fair score. But if you’re wanting a swanky penthouse in San Francisco, Manhattan, or somewhere with similarly high rents, you’re probably going to need a 740+ score.
Know before you shop
Before you begin your search for a rental home, pull your credit report. By law, you can get a free copy of that once each year, and you can order yours at annualcreditreport.com. Correct any errors you find by writing to the credit bureaus and supplying documentation showing that a bad entry is inaccurate.
Your credit score is wholly based on your credit report. A computer algorithm creates a score based on your report’s contents.
You can find countless websites offering free credit scores online. Avoid signing up for a free trial period unless you’re happy to pay fees later. And don’t expect the score you get to be the one your landlord sees. You have dozens of legitimate scores, many of which will probably be different. Regard the one you receive as a ballpark number.
My credit score’s not high enough
You may be able to find ways around a low score, even if your future landlord’s a stickler:
- Get a friend or relation with good credit to co-sign your lease — but it will have to be someone who loves you because she’ll be putting her own credit score on the line if you default
- Pay several months’ rent upfront, if you can
- Give a good reason for your low score — Some people have low scores simply because they’re young and are yet to build up a track record, or because they haven’t borrowed anything for several years
Another option is simply to improve your score. You can probably move your score up by a worthwhile amount within a few months by reducing balances and paying on time.
Improving your credit score when renting a home
One attractive thing about credit scoring systems is they place more weight on recent activity than older stuff. So consistently good behavior can quickly push scores up.
Of course, you have to be realistic. It’s going to take many years for you to get from a FICO score of 579 or less (“poor” credit) to 740 or more (“very good”). But any improvement makes you more attractive to landlords. And it should generally help you to borrow more cheaply and easily when you’re ready to buy a home as well.
For a quick hit, you need to do three things:
- Pay all your bills on time. and clear any arrears you already have
- Reduce your card balances to less than 30 percent of your credit limit
- Don’t open any new accounts and don’t close any old ones
You may not have the money to completely achieve the first two. You’ll likely give your score a boost when you make any improvement.
It’s not just when you’re renting
What credit score do you need to rent an apartment? Consider that even when you’re not about to rent or a buy a home.
We tend to think more about credit scores when we’re facing a big financial event: renting a home or applying for a mortgage, credit card or loan. It’s good if you can keep your score front and center whenever you make a purchase or payment.
That’s because a low score can cost you serious amounts of money over your lifetime. One estimate reckons the average cash difference between living a life with excellent credit and one with poor credit is $200,000.
And the effect of low credit can dog you in other ways: by closing off options and opportunities that are open to others. So don’t forget your score, even when you don’t immediately need it.Time to make a move? Let us find the right mortgage for you