As of quarter three of 2022, the average credit score in the U.S. is714. Fortunately, most landlords don’t expect your credit score to be quite high to lease their properties — they generally require around 650. But what do you do if your score is below that number? And how do you even check your credit score and report in the first place?
This article discusses what a credit check is, why it’s important, and how to pass it. Keep reading to snag some tips on renting a property even if you have a lower credit score.
What Is a Rental Credit Check, and Why Is It Necessary?
A credit check is when a landlord or property manager looks at a prospective renter’s credit habits to determine if they want to lease their property to them. They do this because renting a property is a monthly commitment, so they want to ensure their next renter can pay rent on time every month. A credit check looks at the following:
- Credit score
- Credit usage
- Credit bureau insights into the factors contributing to the credit score
- Account summaries
- Tradelines
- Payment history, including whether payments have been missed
While reviewing, landlords look for information to determine whether you meet their screening criteria. Positive notes are consistent on-time payments, low debt-to-income ratios, and no delinquent accounts. However, negative remarks consist of the following:
- Late payments:If you repeatedly didn’t pay your rent, utility bills, or credit loans in the past, landlords may be afraid you won’t pay your rent on time each month.
- Significant debt load:If you have substantial debt that could affect your ability to pay rent, this could be a red flag to landlords. However, landlords will typically consider the nature of the debt. For instance, they see if it’s responsible debt, like student loans, or irresponsible debt, such as large credit card balances.
- Delinquent accounts in your rental history:If your previous landlord has reported your payment history to the credit bureau, this will show up on your credit report. So, if you owe your previous landlord a large sum of money, the new landlord will likely deny your application. In this case, it’s best to pay off the amount you owe before applying.
How to Pass a Credit Check
Following the steps below will increase your chances of passing a rental credit check.
1. Review Your Credit Score and Report
Checking your credit score before applying to an apartment can help you see where your score is currently. To do this, you cancreate an Avail Renter Profileto add your residential information and a TransUnion credit report for a one-time fee. The credit report will show your credit score and what’s contributing to it. If your score is below 650, knowing the factors contributing to it can help you explain to the landlord what you’re doing to fix it.
If your credit score is low, that doesn’t necessarily mean your application won’t be accepted, especially if you talk to the landlord about it before applying.
2. Improve Your Credit Score
Building on your credit score before applying for a rental can increase your chances of being accepted.
Quick ways to boost your credit score include the following:
- Catch up on past-due accounts:Pay off your debts and past-due accounts. This includes debt to your previous landlords and credit card debt.
- Don’t miss payments:Try to pay all your bills on time, even if it’s the minimal amount due. This ensures your payment history remains impeccable and shows prospective landlords that you have a history of managing payments responsibly.
- Apply for new accounts only when needed:Credit applications generally result in a hard inquiry being added to your credit report. While a single hard inquiry might not significantly impact your score, its effect can add up if you apply often. A conservative approach is to apply no more frequently thanonce every six months.
- Dispute credit report errors:Mistakes on your credit report could pull down your score. Disputing them can help you quickly improve your credit.
3. Prepare to Apply for the Property
As a renter, you must fill out a rental application and allow the landlord to conduct a background check. This process can take anywhere from hours to days.
Gather all the necessary documentation so you can easily fill out the application. The documents you’ll likely need include the following:
- Paycheck stubs
- Proof of income
- Tax returns from the last year
If you have anAvail Renter Profile, as mentioned earlier, you can save time and costs by giving your rental information to the landlord through a shareable link.
Your profile can also contain information about your credit score, background, and eviction history, so you won’t have to pay an application fee for more than one rental property.
How to Rent a Property If You Have a Low Credit Score
As mentioned earlier, having a bad credit score doesn’t mean you can’t rent a property. It just means you’ll have to find ways around it. Here are some things you can do:
1. Offer Advanced Payments
Landlords are usually only concerned by bad credit scores, which could result in late payments. If you offer to pay extra rent upfront, this could sway the landlord since it gives them a guaranteed income for a longer period. It also shows them you’re responsible since you’ve saved a significant sum.
The more you can offer upfront, the better. But two to three months’ worth often works just fine.
2. Get a Co-signer
Another way to overcome a bad credit score is to find a co-signer with a good credit score willing to put their name on the application. This will make you seem less of a risk since the landlord can turn to your co-signer if you miss a payment.
3. Provide Strong Proof of Income
You could also provide the landlord with strong proof of income through bank statements, employment letters, pay stubs, savings, or other income sources. This will verify your financial capacity and show the landlord you can afford the rent.
4. Offer a Good Explanation
Being upfront with the landlord and explaining why your credit score is low could help them better understand your situation — instead of jumping to their own (incorrect) conclusions.
You might be recovering from a divorce or have lost your job and missed payments before finding another job. Letting the landlord know the reasons behind your score could make all the difference.
5. Live With a Roommate
Finding a roommate to add to the lease can also work, provided the roommate has a good credit score. A second person added to the rental agreement could make you a lower risk in the eyes of the landlord.
6. Get References From Past Landlords
The right references (such as those from former landlords) could also help you overcome a bad credit score when applying for a rental property. You could ask your former landlord if they’d be willing to speak to your prospective landlord about your reliability.
Just be aware of thequestions your prospective landlord may ask your previous landlordso you’re prepared to respond to any resulting inquiries.
Only use this approach if you have a stellar rental history with a previous landlord. Otherwise, this could work against you.
7. Rent an Apartment Month-to-Month
There are four maintypes of rental agreements:
- Month-to-month:These lease agreements renew each month until you or the landlord provide 30 days’ notice.
- Short-term:These lease agreements last anywhere from three to six months.
- Long-term:These lease agreements generally last anywhere from 12 to 15 months. In some cases, they can be even longer.
- Rent-to-own:These lease agreements give renters the option to rent the property for a certain period before buying it from the landlord.
If your credit score is too low and you need an apartment fast, you can opt for a month-to-month rental.
Landlords who offer month-to-month properties likely won’t care about your credit score as much since they can simply give you 30 days’ notice if you fail to pay your rent.
How Long Does It Take to Rebuild a Credit Score?
There’s no set timeline for how long it takes to rebuild a credit score. The time frame will ultimately depend on why the score is low and your steps to improve it. For example, if your score is low due to errors on your credit report, this issue can be quickly fixed if you report the mistakes.
But if your credit score is low because you didn’t make multiple payments and fell over 90 days behind on your payments, it could take much longer to recover. The effects can be even worse if your late payments resulted in a foreclosure or repossession.
Can I Rent an Apartment With a Credit Score of 500?
Yes, renting an apartment with a 500 or below credit score is possible. However, you might not get the apartment of your dreams until that score improves.
Fortunately, you can still get a decent apartment if you provide strong proof of income, get a co-signer, or rent on a month-to-month basis.
Can I Rent an Apartment If I’ve Been Evicted in the Past?
While aneviction historyis tricky to navigate through, you can still get an apartment if you explain your situation to the prospective landlord in your application cover letter.
Explain to the landlord that even though you have an eviction history, you’ve taken steps to live more responsibly. While you likely won’t get your dream apartment if you have an eviction history, a reasonable landlord may give you a chance.
How Long Does It Take to Hear Back About a Rental Application?
Depending on where you live, you should be able to hear back about your rental application within one to three days. If you live in a high-turnover rental market, application turnaround can take less than 24 hours.
During this time, the landlord will review your application and pull data from your credit report to analyze it for any red flags. They’ll also read through your other application details to see if you’d be a good fit for their property.
If your application is taking a long time to review, contact your agent or the landlord directly to find out if there are any problems.
What Should I Do If I’m Unable to Authorize a Credit Report?
Supposeyou can’t authorize a credit reportwith a social security number or an individual taxpayer identification number. In that case, offer the landlord alternatives to help them verify your information.
Provide them with a credit reference, landlord reference, monthly bill statement, bank account statement, or pay stubs. If you create an Avail Renter Profile, you can add these screening documents through the dashboard for your reference.
Create a Renter Profile With Avail
Applying for a rental doesn’t need to be complicated. Avail simplifies the process by allowing you to check your credit score and reports before submitting an application to the prospective landlord.Creating anAvail Renter Profilewill also help you save on costly application fees and make a good impression on landlords by getting an organized and comprehensive application in front of them in minutes.
