The Importance Of Credit On Renting
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One thing you may not realize is that a landlord or property manager is likely to request your Social Security Number so they can pull a credit report on you. Again, your state may have rules about this process. The company may have to ask your permission and retrieve your signature on a form agreeing to allow them to access your credit report.
This inquiry is not to give you credit nor does it allow the company to make any notations on your credit report. Rather, it is for the property manager to use to determine what your credit history is. Some companies will not use credit scores while others will. In both cases, ensure your credit is as high as possible.
Many larger property management companies do have credit score minimums in place. If your credit score or your credit history does not meet their specific goals, they may not be willing to rent to you. Most companies consider past credit performance to be an indication of future credit use. If you have a history of overspending or not making payments on time, this will lead the company to believe that you are likely to do so again.
Tips For Cleaning Up Your Credit
As long as four to six months prior to your search for an apartment, you should consider working on your credit score. It has become an integral part of the process of renting a home or an apartment in most areas. There are a few things you can do to give your credit score a boost to ensure it is as high as possible.
1.Pay down any debt you can. The lower amount of debt you have, the better this will look. At the same time, do not close off older accounts, even if you do not use them. These accounts establish a long term credit history for you which is invaluable.
2.Do not open any new lines of credit, unless you do not have any or many. You do not want to have your credit score drop because you are opening several new lines of credit close to each other. If you have very limited credit, you may wish to get a new line of credit, such as a credit card, to help establish your credit history. Use it one or two times a month and pay off the balance in full at the end of the month.
3.Make on time payments. The largest factor affecting credit scores is your ability to make payments on time. If you have been late in the past, establish more consistent payments going forward. This will provide you with the strongest evidence of your overall ability to pay your landlord on time every month!
4.Check your credit report. You can do this by visiting each of the three national credit reporting agencies and requesting a free copy. To do that, visit FreeAnnualCreditReport.com, the only service associated with getting this free, no obligation credit reports for those in the United States. There, request a copy of each report, including one from TransUnion, Equifax and Experian. Look through the report for errors or information that is not correct. Then, contact the credit reporting agencies through their website to report any discrepancies. These are usually removed within 30 to 45 days and can give you a nice boost in terms of your credit score if they are significant information.
5.Use credit but do so wisely. Whenever possible, pay off your full balance each month. This shows that you are capable of using credit but that you do so within reasonable limits.
Note that your credit report is an integral part of your application for renting a home or an apartment. Therefore, do not skip this step of cleaning up your credit if possible. You want to put your best food forward especially if you hope to get into a highly competitive unit.
If you are unsure if you will qualify for an apartment based on your specific credit score, you may ask the property manager about their requirements. Outright ask if the company if they verify credit scores and use credit histories and what their minimal requirements are. This is an important step since you do not want to waste your time applying for a loan you may not qualify for.
Note that even individual owner landlords do still do credit checks. Most of these companies will only use a credit history (not necessarily the score) to check out what is happening with you.
They are looking for:
- Your ability to make your committed monthly payments on time.
- The number and amount of debts you have to pay (do you really have enough money to pay these obligations plus the new rental payment?)
- How long you have had credit
- How much money you owe (If you owe a great deal, you may be on the verge of bankruptcy, which is likely to be a deal breaker for most companies.)
- They also use these reports to ensure that you are who you say you are.
All of this credit information is just one part of the application process. Some companies make it a more important part of the process than others do. As you consider the various methods to improving your credit and your chances to rent, remember that there are other factors that have to align properly as well before you can get into the property you are hoping to!
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