When looking for an apartment to rent, landlords will most likely run a credit check to help get a sense of your financial standing. Landlords do this to help ensure that you’ll pay your bills on time and will be a trustworthy tenant.
Generally speaking, you need a credit score of 620 or higher to rent an apartment, but different landlords may set their own criteria. Ultimately, the higher your credit score, the better chance you’ll have at getting approved for a lease. Remember, a rental is a source of income for landlords, and they don’t want to jeopardize it with tenants who won’t be able to pay rent on time.
Read on to find out why credit is important when looking to rent and to get some tips on how you can improve your credit score to ensure you get approved for your next apartment.
Why credit matters when renting
Your credit matters because it provides landlords with a glimpse of your financial standing to help them determine whether you’d be a trustworthy tenant and be able to pay rent on time. If you’re renting in a competitive market, your credit can help you stand out among other prospective tenants looking to rent the same property.
As stated above, a credit score of at least 620 is usually needed to rent an apartment, but this number can vary based on the landlord and the market. Those with credit scores lower than 620 may seem risky to prospective landlords. If you’re unsure whether your current credit score meets the criteria needed to rent an apartment, here’s what is considered healthy and unhealthy credit scores according to the FICO credit score range:
| FICO® Score | Rating | What this means for renters |
|---|---|---|
| Less than 580 | Poor | Renters with scores in this range are considered risky to prospective landlords and may seem more susceptible to delinquencies. |
| 580-669 | Fair | Renters with scores in this range may have a hard time getting approved for a lease unless their score is above 620. |
| 670-739 | Good | Renters with these scores are likely to get approved for a lease and are viewed as reliable tenants. |
| 740-799 | Very Good | Renters with scores in this range appear to be trustworthy and dependable tenants to prospective landlords. |
| 800+ | Exceptional | Renters with scores above 800 appear to be exceptional tenants to prospective landlords. |
In addition to your credit score, landlords will also take a look at your credit report. Even if you have a fair credit score, sometimes certain marks on your credit report can sway a landlord’s decision to accept you as a tenant.
Credit-related red flags for landlords
Negative marks and red flags on your credit report can indicate a history of mismanaged finances and raise the concern that you may not pay your rent on time. Small marks, such as one late payment on a loan, are less worrisome to landlords, but other marks may seem a little riskier.
The following items on your credit report could be a red flag for landlords:
- Repossessions: This shows landlords that you allowed your payments to go unpaid, making you appear to be a risky renter.
- Bankruptcy: This shows landlords that you may not have the funds to cover your monthly rent payment given your financial history.
- Late payments: This shows landlords that you have had trouble making on-time payments in the past, which raises concern.
- Garnishments: This shows landlords that you might not be able to afford rental payments due to a high amount of debt.
That being said, a credit report doesn’t always tell the whole story. Be prepared to explain the reason behind any negative marks to your prospective landlords. A simple explanation can make a difference in helping them understand the reason as to why there are delinquencies on your report.
Should a landlord reject your application based on findings in your credit report, they must give you a reason in writing and provide information on how to get a free copy of the report that was viewed.
Should you have marks on your report that influenced a landlord’s decision to deny your application, you have the right to know what these marks are. If you were unaware of them before, request a free copy of your report and thoroughly look through it to verify the information and make sure there are no discrepancies.
If you happen to have marks on your report that you were unaware of, you can begin the process of submitting a credit dispute. To do this, you must send a letter to one of the three credit bureaus, contact the data furnisher that provided the information and wait for a response from the credit bureaus. Credit bureaus usually have 30 days to investigate a dispute.
Can I be denied an apartment for bad credit?
Ultimately it’s up to the landlord to decide whether they want to rent their property to you given your credit score. Some landlords may deny your application and others may be more understanding. The bottom line is that the landlord wants to make sure you’re going to be able to pay your rent on time, which is why they look to your credit report.
Having a low credit score can make it more challenging to rent, but there are still ways to work around it and prove you’re a good tenant. Getting a cosigner or offering to pay in advance are a couple of ways you may still be able to rent an apartment despite your bad credit score. If there were circumstances that affected your credit, such as a job loss, landlords and property managers may choose to overlook those situations and approve you for a lease.
5 ways to improve your credit score before renting an apartment
If you’re worried that your credit score will prevent you from getting the keys to a new apartment, there are a few steps you can take. Improving your credit score is not a one and done type of situation. It takes time to build it up.
Here are some easy ways you can fix your credit score quickly:
1. Check your credit report
Take a thorough look at your credit report. Contrary to popular belief, looking at your credit history won’t lower your credit score, so don’t be afraid to request a credit report. Your credit report may contain errors that could unfairly prevent you from being approved for an apartment. If this is the case, do your due diligence to get these removed from your credit report.
2. Don’t close old credit cards
Many people think that closing old credit cards is an easy way to improve your credit score, but in fact, the opposite is true. The length of your credit history accounts for 15 percent of your overall credit score, according to FICO. Older lines of credit can help your score. Even if you aren’t using a card, it’s best to keep it open to help ensure your score doesn’t drop.
3. Pay your bills on time
Missed or late payments can quickly cause your credit score to drop. On-time payments also account for a portion of your credit score breakdown. To avoid missing payments, consider setting up auto-pay so you don’t have to worry about remembering to pay your bills on time every month. If you’re behind on payments, make sure you do what you can to catch up. Doing this will help show you’re a reliable tenant and able to make on-time payments to future landlords.
4. Pay more than the minimum payment and pay down outstanding balances
Paying more than the minimum payment can help you pay off your debts faster and can improve your credit utilization ratio. If you have multiple lines of credit, try tackling the one with the highest interest rate first. According to FICO, 30 percent of your score is based on the total amount you owe. Your debt amount affects your score because the more you owe, the more it can impact your ability to make payments on time.
5. Ask for a higher credit limit
If you’re not in the financial position to pay off your debts, you could ask for a credit limit increase. If you’ve had a credit card for a while, have made payments on time and have a low credit utilization, your creditor will likely approve you for an increase.
While getting a credit increase may seem appealing, you need to be smart about the way you look at it. For example, if you had a $2,000 credit limit and your creditor increases your limit to $4,000, this doubles the amount of credit you have available. You can most benefit from this by making sure not to charge up your card and making sure to avoid spending all of your new credit.
Though your credit score has an impact on whether landlords will accept you as a tenant, there are certain strategies you can use even if you have a credit score that is lower than the average needed to rent an apartment. If you’re on the market for rentals, your best bet is to focus on improving your credit score and getting it as close to 620 as possible to make the process easier.
Looking for a rental is an exciting process and ensuring you’re in a strong financial position can make the process easier and help you get the apartment you want.
Reviewed by Anna Grozdanov, Associate Attorney at Lexington Law Firm. Written by Lexington Law.
Anna Grozdanov was born in Sofia, Bulgaria, but moved to Arizona with her family. Ms. Grozdanov grew up in Arizona and went on to graduate Magna Cum Laude from the University of Arizona with a B.A. in both Philosophy and Psychology. Ms. Grozdanov finished her first year of law school at Pepperdine University School of Law in California, but returned to Arizona where she graduated from the Sandra Day O’Connor College of Law. Since graduating from law school, Ms. Grozdanov has worked in Estate Planning, Estate Administration, Probate, and Personal Injury. She has extensive experience advising and working closely with clients and applies these skills at Lexington by helping clients achieve their credit repair goals. Ms. Grozdanov is licensed to practice law in Arizona. She is located in the Phoenix office.
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