Many people know that a credit score has a role to play when applying for a mortgage. Lenders like to see a credit history before approving a loan. But it is less common that people consider the effect of their credit score when filling out a rent application. While not as stringent as when applying for a home mortgage, a credit score is still a factor landlords take into consideration when deciding whether to approve a renter.
If you are thinking of moving to a new place, or maybe out of your parents' home for the first time, then be mindful of how your credit score could mean the difference between approval and rejection.
"A credit score is a factor landlords take into consideration when approving renters."
Landlords like sure things
When landlords ask potential tenants to fill out an application and provide a signature to approve a credit report check, it is because they want as little risk as possible. Remember that this is a source of income for the landlord, so he or she doesn't want to mess around with tenants who won't be able to pay rent from month to month. Therefore, they will take your credit history into account.
While having stellar credit is not a stipulation for renting in many places, it is worth noting that if you are considering moving in the near future, doing some credit repair might not be a bad idea. It is also important to highlight that credit inquiries can have an effect on your score.
According to a Q and A at Bankrate, rental-affiliated credit inquiries are considered "hard inquiries," which negatively impact your credit score. This occurs because you are pursuing a new line of credit, in this case, a rental for the next year. There is a fee associated with this type of credit check, which is usually covered by an application fee so the landlord doesn't have to cover it. Sometimes this can be enough for a landlord not to request a credit report, but to make sure you have all our bases covered, you should apply under the impression you are about to have a credit check take place.
You have rights
When you give a landlord the approval to inquire into your credit history you are not signing away privacy or credit report rights as they pertain to you. For example, if a landlord rejects your application based on a finding in your credit report, he or she is supposed to provide you with a copy of the report that was viewed and considered in the decision, according to Credit.com.
This provides you an opportunity to not only dispute any incorrect information on your credit report, but to know exactly what it is that you need to improve or be aware of. For starters, it is wise to check your credit report before filling out an application if you are unsure how you stand financially. This is so you can identify anything that is incorrect and dispute it before a rejection. Additionally, by seeing where you need to improve your credit report, you can put a plan in place to bump up your credit score before the application process begins.
Before making the move to an apartment, make sure your credit score is not going to be a hindrance to the process. It is widely known that renting can affect your credit score, but fewer people know their credit scores can affect their ability to rent. Make sure you take the necessary steps to ensure you can rent the apartment that you want.