How to Pass a Rental Credit Check | A Complete Guide
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If you are trying to rent your dream apartment or any other property, you will have to undergo a rental credit check. This allows landlords to analyze your financial responsibility and determine whether you can make payments on time. Besides, it minimizes their risk and helps them choose reliable tenants. But how to pass a rental credit check?
It’s a question frequently asked as more people enter the rental market. Statistics reveal that renters make up approximately 34% of the US population, with 44 million housing units in the US currently being rented.
So, to help you navigate this step, we will discuss tips that answer how to pass a rental credit check along with the factors that potential landlords consider before giving their property to tenants. Let’s begin!
What is a Rental Credit Check?
Generally, a rental credit check refers to a process in which landlords analyze the creditworthiness of a tenant before renting their property. The purpose is to check how well the tenants may handle their money and whether they are capable of paying rent on time or not.
Why Do Landlords Do a Rental Credit Check?
Before going into the details of how to pass a rental credit check, it’s essential to learn why landlords require a credit check first. Here are some points that give you insight into this:
Find Out Potential Problems
Firstly, landlords run rental credit checks to identify potential problems in a tenant’s profile. For instance, you get to know about the candidate’s late payments history, bankruptcies, and accounts in collection.
It’s very important for you as a landlord, as 37% of Americans have been charged a late fee on their bills over the past 12 months. Not only this, but the annual bankruptcy filings in the US totaled 452,990, so the risk is always there!
Ensure Timely Rents
Another reason why landlords do a rental credit check is to make sure that the tenant is reliable enough and that they will get timely payments. This gives them a much-needed sigh of relief that they will be able to cover everything, including bills, mortgage, and other property taxes, avoiding legal penalties.
How to Pass a Rental Credit Check?
Now that you are aware of what a rental credit check is and its importance for landlords, you must be looking forward to how to pass a rental credit check. If yes, here are some tips and tricks:
Know Your Credit Score
If you aren’t already aware of your credit score, you should first look at your credit report to know where you stand currently.
For this, you can visit PFScores, which provides you with detailed credit reports after taking a 360° view of all your savings, debts, and risk management efforts.
In case your score is above 650, you are more likely to pass the rental credit check. However, if it’s lower, you might need to improve it or talk to the landlord directly.
Be Honest
We often hear Honesty is the Best Policy, and it’s true! So, another important step in “how to pass a rental credit check” is to be honest and transparent with the landlord.
You should clearly tell them that you have a low credit score and mention the reasons behind it without any fake stories or sugarcoating.
For instance, you can tell the landlord that your credit dropped due to medical bills or a temporary financial setback. Doing so builds trust and assures them that you are credible and willing to take responsibility for all financial challenges.
File Disputes
Another important step in “how to pass a rental credit check” is to file disputes. Well, sometimes credit bureaus make mistakes in reporting your data that reflects on your credit report and score.
For instance, they may skip one of your payments made on time, resulting in a low credit score.
However, there’s nothing to stress about, as you can file disputes with bureaus using any AI credit repair app. They will then make changes to your report, ultimately increasing your credit score, which is demanded by many landlords.
Improve Your Credit Score
If your credit score is below 650, you should make quick efforts to improve it. Here are some tips that boost your credit score and answer the question “How to pass a rental credit check?”
- Pay Bills on Time: You may not know this, but payment history makes up 35% of your credit report. Therefore, to ensure a good credit score, you should pay all bills on time. Whether it’s a gas, electricity, or internet bill, you should make payments before the due date passes. If manually remembering all the dates seems like a daunting task, you can rely on various AI apps that alert you whenever your bills are due.
- Clear Past Due Accounts: Debts, including credit card and debit card debts, negatively impact your credit score, so if you have them, you must pay them off to increase the score and pass the rental check.
- Have a Good Credit Utilization Ratio: Your credit utilization ratio typically refers to the credit you are currently using against the total available credit. Generally, it’s recommended to maintain a credit utilization ratio of 30% and even lower. This tells landlords that you are an expert in managing your debts and will surely pay them rent on time.
Apply for the Property
The most important step in passing a rental credit check is to collect all the documents and apply for the property.
For instance, you should collect paycheck stubs, proof of income, and tax returns from the previous year. You can fetch your credit report from PFScores and attach it with all the other documents to add volume to your application.
Most probably, you’ll hear back from the landlord in 1 to 3 days, but if it’s more than that, you should contact them and find out if there’s an issue you aren’t aware of.
What Landlords Can Check on Your Credit Report?
After knowing how to pass a rental credit check, here’s an overview of what landlords will see on your credit check report:
- Debt accounts: Landlords get an overview of your current loans, credit card balances, and any other outstanding debt you have to judge your financial responsibility.
- Payment history: They also look at your payment history to know if you make payments timely or have late or past due payments.
- Negative information: Other information such as loan defaults, charge-offs, and collections are also visible to show your financial difficulties in the past.
- Credit Card Utilization: Landlords also inquire about your credit utilization ratio. If it’s above 30%, it indicates that you are overly reliant on credit and may not pay rent on time.
- Bankruptcy, Foreclosures, and Repossessions: If you have ever filed for bankruptcy, it’ll be present on the rental credit check report. Other than that, information about foreclosures and repossessions is also there to inform landlords about the inability of a tenant to manage property or finances.
How to Pass a Rental Credit Check with a Low Score?
If you have a credit score and are wondering how to pass a rental credit check, here are some tips:
Try to Make an Advance Payment
The first thing you can do in “how to pass a rental credit check” with a low score is to offer advance rent payment. So how does that work? Know that a low or bad credit score shows landlords that you may not be able to pay rent on time.
However, giving a small rent amount in advance assures them a good income stream and lower risk. The more you are willing to pay in advance, the more your chances of getting the property.
Tip: Don’t promise to pay more than you handle; 2 to 3 rent payments in advance are a good point to start!
Offer Strong Proof of Income
Another tip on how to pass a rental credit check is to provide landlords with strong proof of income. For instance, you should show them your bank statements, employment letter, and proof of current savings. This can convince the landlord that you earn enough to pay their rent, and they may rent you the property.
Have a Cosigner
If you are a student or young adult just starting out with your independent life, you may not have a good credit history. The reason behind this could be the overwhelming student loans and simply not having enough money.
In such a situation, the best answer to how to pass a rental credit check is to have a cosigner.
Typically, a cosigner is the person who signs the lease document for you to guarantee that if, unfortunately, you default on the rent, they’ll pay it off. A cosigner can be anyone with a good credit score, from your sibling to parents, friends, and any other member.
Ask Previous Landlords for References
It’s quite unheard of, but your previous landlord can also help you pass your rental credit check. You can request them to talk to your prospective new landlord about how reliable you are and your payment schedule. Nonetheless, you must know that the new landlord will ask questions about the following:
- How you were with rent payments
- Whether you were respectful
- In which condition you left the previous house
So use this strategy only when you are aware that you tick all the above boxes; otherwise, it can backfire!
It’s also advisable for you to provide a written explanation of your bad credit. For instance, you may write a letter or application to the landlord telling them that the severe hit in your credit score is due to job loss and medical treatments. Landlords will then definitely factor in these situations before finalizing a decision.
How Landlords Do a Rental Credit Check?
There are different ways a landlord can do a rental credit check, ranging from credit bureaus to tenant screening services. Let’s get into the details:
- Credit Reporting Bureaus or Agencies: Landlords may retrieve your credit reports directly from the top three bureaus or credit reporting agencies, like Equifax, TransUnion, and Experian. The report contains information about your payment history, debts, and other negative items, like hard or soft inquiries.
- Tenant Screening Services: They can also rely on tenant screening services like SmartMove to access credit reports and get information on the tenant’s criminal background and eviction history to make informed decisions.
Landlords can also use different associations like the National Association of Independent Landlords that offer detailed tenant credit reports by charging a small fee.
What is the Minimum Credit Score to Rent an Apartment?
The minimum credit score to rent an apartment usually varies for each landlord. It’s because everyone has their own criteria for a good and bad credit score. However, typically, a credit score of 650 and above is quite good enough to pass the rental credit check and get the property.
FAQs
Yes, while an eviction history is quite tricky to navigate, you can still get an apartment if you properly explain your situation to the landlord in the application.
Yes, you might rent an apartment with a credit score of around 500 if you have a cosigner with a good credit score or strong proof of income. However, to get your dream home, you often have to wait until your credit score increases.
The actual duration of improvement in the credit score varies depending on the situation. For instance, if your credit score was hit because of inaccurate reporting, you can file disputes and increase it right away. But if it’s because of a late payment, you fall behind 90 days and require much more time to recover.
Conclusion
The answer to how to pass a rental credit check process becomes easy if you are honest, file for disputes in a timely manner, and make efforts to improve your score. Wondering where you can get a highly accurate credit report both as a landlord and tenant? PFScores is the one-stop platform! It analyzes your savings, debt, and risk management capabilities, generating a personalized credit report that shows your financial health.