Why does my credit matter if I want to rent a place to live?

About ninety percent of landlords and property managers pull credit as part of the rental screening process. It isn’t the only thing they look at when evaluating your application, but a good credit score can be an important indicator to them that you will pay your rent on time because it reflects a pattern of making on time payments.

What do landlords look at when they check credit?

In addition to checking credit scores, landlords might also look at a potential renter’s credit report, which can provide a more complete financial picture of the applicant than the score alone. Landlords or property managers generally aren’t looking for immaculate credit, but certain negative items may make them more likely to reject an applicant. For example, when reviewing a credit report, landlords might look at an applicant’s:

  • General Payment history over the last 24 months.
  • Collection items, particularly any related to utilities or other payments associated with housing. Some landlords may be more understanding of medical debt.
  • Bankruptcies.

What can I do to position myself for approval?

First and foremost, know what is on your credit report! Check with your Working Credit Counselor to review your latest report. They can help you identify what you might want to explain, if possible, to a prospective landlord. If you don’t need to rent right away, you can also work with your Working Credit Counselor to prepare for doing so in the future. You can also check your report yourself by going to  www.annualcreditreport.com. You’re entitled to a free annual credit report from each of the three major credit bureaus, but remember, if you want to see your score through that website you will need to purchase it.

Will rental application credit checks hurt my score?

In limited cases, a credit check by a prospective landlord could result in a hard inquiry, which do have some, but minor, impact on your credit scores. A hard credit check is when your credit report is pulled to check your credit history for a new line of credit. It is more common that when a landlord checks your credit it will be a soft inquiry. Soft inquiries pull the same information, but won’t ding your credit score since they’re not attached to a specific application for credit.

What else might matter to a landlord?

To be sure, good credit doesn’t ensure approval. Factors such as income, criminal convictions and past evictions can also play role in the approval process. It’s always good if you can talk to the landlord to get a better idea of what they are looking for before applying.