The credit score you need to rent an apartment, and what to do if you don’t have it
Landlords and property managers ask for a ton of information about prospective tenants’ personal finances before agreeing to rent an apartment to them: paystubs, tax forms, and credit scores. Learn more about how your credit score might affect your rental application, and what you can do about it.
Table of contentsWhat is a credit score?What is a good credit score?What is the minimum credit score to rent an apartment?6 options for renting an apartment with a low credit score5 Easy Ways to Improve Your Credit Score
What is a credit score?
A credit score is a three-digit number based on your credit history that banks, credit card issuers, auto loan issuers, insurance companies, and landlords use when making lending or leasing decisions. If you have a low credit score, banks might consider you “risky,” and charge you higher interest rates, or deny your application for credit. Although credit reports traditionally don’t include rent payments, landlords and property managers will often look up your credit score or report, as bad credit is a red flag for some landlords.
What factors determine the credit score?
There are five factors that determine your credit score:
Payment history: This accounts for the largest chunk of the credit score (35%) and shows whether you make loan and credit card payments on time.
Accounts owed: This is the second largest part of the credit score (30%) and has to do with how much money you currently owe on your credit cards and loans.
Average age of credit: The age of your credit accounts for 15% of your credit score.
New credit: This makes up 10% of your credit score and refers to any recent checks on your credit report. (This does not include soft inquiries, which are requests you make yourself.)
Credit mix: The final 10% of your credit score is determined by types of credit accounts: revolving and installment. Having a mix of both revolving and installment credit looks best to lenders.
What is a good credit score?
Credit scores typically range from 300 to 850. Depending on the individual lender or insurer, you may see different standards, but generally a FICO score above 800 is considered excellent; “very good” FICO scores range from 740 to 799; a “good” score ranges from 670 to 739; and 580–669 is considered “fair.” Any score below 580 is considered poor.
What is the minimum credit score to rent an apartment?
If your score is in the very good to excellent range, you probably won’t have to worry about your credit score impacting your ability to get an apartment. (As long as the rest of your tenant screening goes well.) That said, the ideal score depends on several factors, including your local rental market and whether you’re renting in a luxury building.
According to a 2017 survey report from RentCafe, the average credit score of approved applicants was 650, while the average credit score of rejected applicants was 538. For high-end buildings, the numbers are a little higher: 683 for accepted applicants and 553 for rejected applicants. Location has an even bigger impact on the average credit score needed for approval. The cities with the highest credit scores were Boston (737), San Francisco (724), Seattle (711), Minneapolis (711), Oakland (707), Philadelphia (702), and Los Angeles (691).
A good rule of thumb is that more competitive rental markets and fancier building will require higher credit scores, but there’s only one way to know for sure. Ask your potential landlord or property management company if they have a hard minimum on credit scores.
6 options for renting an apartment with a low credit score
If you think your credit score might be keeping you from renting an apartment, there are proven ways to safely build credit. Most of those strategies, however, can take months to show up on your score. If you need to get an apartment in the short term, there are a few ways to show property managers that you’re a good renter:
Proof of rental payments: If your credit score is low but you’ve always paid your rent on time, show your potential landlord or property management proof of at least six months of on-time rent payments, in the form of a bank statement or check images.
Letter of recommendation: A letter of recommendation from a previous landlord describing what a great tenant you are (and how you always paid your rent on time) might not be enough to get you an apartment, but it could be the icing on the cake. If you’ve never rented an apartment before, you can ask someone else, such as an employer, for a letter of reference.
Lease guarantor: If you have low or no credit and you’ve never rented an apartment before, you might need a guarantor, also known as a lease cosigner. Keep in mind that your new landlord will ask for a lot of information about your cosigner’s finances, and your cosigner will be on the hook if you don’t pay your rent.
Proof of savings: Your rental application likely already includes your income, but it might not ask for your net worth. In lieu of other financial information, some landlords will accept proof of a large amount in your bank account.
Offer to pay more up front: If you can afford to do so, you might be able to entice a landlord with an offer to pay more than first month’s rent and the security deposit up front. Make sure you actually have space in your budget for this—you don’t want to offer a bunch of cash up front and then not be able to pay rent (or go into debt!) later on.
Explain the situation. If you’re working with an individual landlord or a smaller property management company, it may help if you can explain the negative parts of your credit report, and what you’re doing to improve your credit.
Try Bungalow. Bungalow offers private rooms in shared homes in ten cities nationwide. “At Bungalow we believe deeply in our mission to increase access to housing in our communities,” says Matt Hammel, VP of Business Operations at Bungalow. “Many of our residents come from different financial circumstances, and are at various stages of their journey to build credit and financial savings. We know that, unfortunately, building credit can at times be a nebulous and frustrating process, especially for recent graduates. As such, we’ve designed Bungalow to give residents with different credit scores a wide array of options to qualify, including using a co-signer or obtaining security deposit replacement insurance, which allows residents to provide collateral with no large cash outlay.”
5 Easy Ways to Improve Your Credit Score
Building credit is a process that can take years. But there are a few things you can do right now to boost your score.
Apply for a credit card. For your first card, look for an entry-level card with no annual fee. (If you don’t qualify for most credit cards, look into secured credit cards, which are backed by a deposit.) Once you have your new card, remember to pay your bills on time, don’t use more than 30% of your available credit.
Ask for a higher credit limit. Since one of the factors determining your credit score is credit usage (i.e., how much of your credit limit you actually spend each month), a higher credit limit, can help get your usage way down. If you already have a credit card, ask your credit card issuer for a higher limit. When they say yes, remember to keep your utilization low.
Turn on autopay. On-time payments account for the biggest portion of your credit score. To make sure you never, ever miss a monthly payment, turn on autopay. Check your statement for any errors before you make the payment. If your credit card issuer doesn’t have the autopay feature, set an alarm or write it in your calendar (or both!)—just find a way to pay your bill the same time every month.
Ask your landlord and utilities companies to report your payments. If you always pay your rent and utilities on time, that should count toward your credit history, right? Typically, it doesn’t factor in, but you can ask your landlord and utilities companies to start sending this information to the major credit bureaus, and it might help boost your credit score.
Check your credit report. Regularly monitoring your credit score can help you track your progress and flag any errors. Your credit score isn’t the only thing that’s important to landlords—credit reports include additional, specific information, such as late payments on loans or breaking an apartment lease. Checking your credit report occasionally will alert you to any mistakes, and you’ll be more prepared to discuss the contents of your report with a potential landlord.
Ultimately, your credit score is just one factor landlords use to determine whether to accept your rental application. Whether or not your credit score makes or breaks your rental application, building good credit is always a good idea.
To improve your credit score, you may need to adjust your personal budget. Rent is one of the easiest fixed expenses to dial down by coliving—that is, living with roommates. Bungalow offers affordable private rooms in shared homes in 10 cities nationwide. Bungalow rooms are less expensive than solo living options like studio apartments, and our homes come with furnished common spaces and stocked kitchens, reducing your move-in cost. Find a Bungalow near you.
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