Are you looking to rent an apartment or house but worried about passing a rental credit check?
Don't worry. I've got you covered because I've written about different credit tips and tricks, and I know you'll be able to increase your chances of getting approved for your dream rental in no time.
Imagine the feeling of finally finding the perfect place to call home and being able to move in without any roadblocks. By following our guidance, you'll be able to make that dream a reality.
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Keep reading to learn how to pass a rental credit check in 2024 and take the first step toward securing your new home.
What Is A Rental Credit Check, And Why Is It Important?
It's basically when a landlord or property management company looks at your credit score and credit report before deciding if they want to rent to you.
They do this because renting a place is a financial commitment, and they want to make sure you'll be able to handle it.
The property manager or landlord will better understand your financial position by running credit checks. When they run a tenant credit check, they will need to check for the following:
- Your social security number
- A copy of your credit report
- Criminal background check
- Employment History
- & Any eviction history
A credit check can give them an idea of your economic history and whether you'll likely pay your rent on time and take good care of the place.
In other words, it helps them pick responsible and financially stable tenants.
This is something to remember if you consider renting a place soon.
The Simple Steps For Passing A Rental Credit Check
Whether you have zero to bad credit or are worried about the tenant screening process, you can take a few simple steps to increase your chances of getting the keys to your brand-new apartment.
1. Check your credit score and report
If you have poor credit or are anxious about the tenant background check process, there are some easy steps to better your chances of finally moving into that dream apartment.
Taking the time to check your credit score and report is an essential first step. Doing so will give you a better understanding of what potential landlords may find during their assessment and can help prepare you for any negotiations you may need to make.
You can use a credit score app such as Credit Karma to view your vantage scores.
Also, having records of all your past payments in hand can demonstrate financial responsibility, which could increase your chances of getting approved for the rental property.
So, before applying for rental properties, take the necessary steps to review and update your credit history. That way, you'll be ready when it comes time for a background and credit check.
2. Pay off debts and improve your credit score
One of the most important steps in the rental credit check process is to pay off delinquent accounts and improve your credit score.
As a responsible tenant, this will lower the debt load that you may have and make your financial health look much more appealing to property managers.
This means you must take charge of any negative items that appear on your credit report, such as:
- Late payments
- Hard inquiries
- Car repossessions
- Incorrect personal information
- Lower your income-to-debt ratio
If you see any negative items that should not be showing on your credit reports, I'd highly recommend using credit repair software to send out dispute letters to the three major credit bureaus.
Not only does this help with your bad credit score, but many landlords consider this a prospective tenant because it shows them you're serious about improving your credit and taking control of your finances.
In addition, this can make you a more attractive candidate when deciding who to rent your property to.
Having a poor credit history can be a major obstacle when applying for a rental agreement, and it will reflect on your financial stability.
Making efforts to increase your score and become more responsible with payments will be beneficial in bolstering your chance of success when undergoing rental credit checks.
3. Prepare for the rental application process
Before looking at potential apartments, you've probably noticed how many landlords ask for so much personal information.
Before I moved out, I never expected to go through a long rental agreement process.
This is because they want to cover all their bases and ensure you're a good fit for the property, so preparing for what comes next is essential.
While filling out an application, gather all the required documents like your paycheck stubs, tax returns from the past year (gross income), proof of income from other sources, and your previous rental payments.
While most property management companies have strict tenant screening services, you can do your best to prepare for the process and ensure it runs smoothly.
By improving your credit and getting all the necessary information, you'll be more likely to get approved for a rental agreement in no time.
4. Have Proof of Income
When going through the apartment credit check and rental process, ensure you have your documents on hand. This includes:
- Bank statements
- Your FICO credit scores
- Most Recent Pay Stubs
- Any other income sources (Side hustles)
Without this, property management companies might deny you the right to rent the property since they cannot verify your financial capacity.
On the other hand, independent landlords might get you off the hook if you show your previous rental history and more money upfront.
But to avoid any potential roadblocks, ensure you are fully prepared with all the necessary documents when applying for a new apartment.
5. Get References from your previous landlord
If you were a good tenant and never had a late payment or significant issues, you could ask for a reference from your previous landlord or property management service.
This could be very helpful even if you have a poor credit score or haven't made timely payments.
Showing that you were easy to deal with and paid your rent could tip the scales in favor of getting your application accepted by the landlord.
While there is no guarantee having good references will make a difference, you should consider reaching out to any previous landlords for recommendations as part of your overall strategy.
What Happens If You Don't Get Approved For An Apartment?
You went through all the credit and background checks, but unfortunately, the rental credit check returned with a negative score.
Don't worry. If this happens to you, you can explore plenty of options in this competitive rental market.
Get A Co-Signer
If you have a low credit score and were not approved for your lease, your best bet would be to find someone who can co-sign your rental application.
Ideally, you would want someone with good credit and a steady source of income to sign with you, but this is not realistic in most situations.
While it's not ideal to ask family members or close friends for something like this, they will probably say yes if you give them a good reason.
The best part is that if you can get approved for the apartment with a co-signer, your credit score will improve since someone else is responsible for all your payments.
Apply For A Credit Builder
So, you checked your Fico scores with each credit bureau but noticed you have no credit.
The best thing to do in this situation would be to apply for a credit builder card to improve your payment history.
This works because of having more credit accounts with positive information and not negative information.
You can then use the increase in your credit limit to help you pay off your loan or credit card balance.
This will be an excellent way to get out of debt and improve your credit score simultaneously.
Consider A Larger Security Deposit
Another way to get the keys to your apartment is by showing that you can be financially responsible.
This can be done with a higher security deposit as this shows you are more dedicated to renting with them than the other prospective tenants.
Either way, the local rental market is becoming saturated, so it's to put more money down since you will get it back by the end of your apartment lease.
Live With A Roommate
As rental applicants with poor credit and a bad background are turned down by various landlords, the demand for shared living situations will only increase.
To give you an idea of the large gap in rental demand, it's been reported that over half of all renters are now living with roommates or family members.
So if you can't afford the monthly rent or do not qualify for an apartment, you should consider a roommate to help you pay the bills.
While this is not ideal for some people, it's your only choice if you want to break into the rental market. But remember that living with someone else will be much different.
Rent Month To Month
The last option is to pay rent monthly instead of committing to a lease.
This can be an effective option if you cannot get approved for an apartment due to poor credit and other negative factors on your rental application.
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While this is certainly not ideal since it's more expensive than signing a one or two-year lease, renting on a month-to-month basis will ensure that you can live in the apartment of your choice.
Suppose you can demonstrate a history of paying rent on time and taking care of other responsibilities. In that case, monthly renting may be your best option for getting approved for your desired apartment.
When landlords are running your credit reports, they typically look at the following:
- your payment history
- number of open lines of credit
- outstanding debt,
- any bankruptcies or judgments against you,
- your overall credit score.
For landlords that use a third-party service to run a background check, they might also review public records such as arrest warrants or criminal convictions. So be careful when applying.
While it is possible to obtain an apartment with a credit score of 500, the chances of you being accepted are small.
Landlords usually require a credit score of 600 or higher to be considered for a rental agreement. However, some landlords may take a lower credit score depending on other factors, such as proof of reliable income or references from past landlords and employers.
You can also look for apartments that do not require a credit check entirely.
Generally, the average credit score to rent an apartment is 620 or higher. But it's best to be around 690+, so you don't have to lump some money into your deposit.
Landlords typically require a copy of a tenant's credit report as part of their application process. They also use a FICO consumer credit report provided by one of the three major credit reporting bureaus: Equifax, Experian, and TransUnion.
Renting an apartment can be challenging if you have poor credit or other negative factors on your rental application.
Fortunately, there are ways to increase your chances of getting approved for the apartment of your choice.
You can opt for higher security deposits, live with roommates, and rent month-to-month instead of signing a long-term lease.
If all else fails, consider using rent reporting services that will help boost your credit score in no time. With these tips and tricks from this article, you should know how to pass a rental credit check.