What credit score do you need to rent an apartment?
There is no minimum credit score to rent an apartment. Landlords and real estate agents will typically ask a potential tenant for permission to view their credit score or credit report to screen them for financial responsibility.
If your credit score is less than ideal there are ways to build your credit score.
Before you get started on your search for a rental apartment, check your credit score for free.
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Do you need credit to rent an apartment?
Generally, yes, it’s good to have a credit history and credit score for renting an apartment.
Credit is a vital part of an individual’s financial health. Your credit score is created based on your credit history which is a record of your creditworthiness based on several factors we’ll discuss in depth, including your on-time debt payments.
Why do landlords check credit scores?
Landlords want to be sure they are renting to people who pay rent on time, are financially responsible, and have a history of successfully managing debt payments. A credit score for renting makes getting an apartment easier.
Do you need credit to rent an apartment? In most cases you will need to have a credit history and credit score. The primary way to assess a person’s financial health is to view their credit score and credit report.
How are credit scores calculated?
Your credit payment history is recorded in credit reports that are maintained by credit bureaus, the most well-known being Equifax®, Experian®, and TransUnion®. If you’ve ever applied for a credit card or a loan, then you have a credit history on file with these agencies.
The most widely used credit scores are FICO® scores, which will range between 350 (high risk) and 850 (low risk). A low credit score tends to correlate to more risk of defaulting on payments.
FICO uses five categories to calculate credit scores
The percentages in the parentheses reflect how important each of the categories is in determining how your FICO Scores are calculated. As the information in your credit report changes, so does the evaluation of these factors in determining your FICO Scores.
Payment history (35%). This is the most important factor in a FICO Score. Payment history keeps track of whether you have been able to make debt payments on time for credit cards, a mortgage, car loan, student loans, medical bills, and other personal debt.
Amounts owed (30%). Having credit accounts and owing money on them isn’t a bad thing. However, if you are using a lot of your available credit, this may indicate that you are overextended, which could reduce your score.
Length of credit history (15%). The longer you have had credit accounts, such as a credit card, the higher your score will be.
Credit mix (10%). FICO Scores will consider your mix of credit cards, retail accounts, installment loans, finance company accounts, and mortgage loans.
New credit (10%). Research shows that opening several credit accounts in a short amount of time represents a greater risk—especially for people who don't have a long credit history.
What's the minimum credit score required to rent an apartment?
The average credit score for approved apartment rental applicants is around 650, whereas the average credit score for rejected applicants was 538.
Can I rent an apartment with less-than-ideal credit?
Although it's possible to rent an apartment with less-than-ideal credit, it's a good idea to take steps to improve your credit score before applying. Having a credit score to get an apartment means you’ll have more options.
How to rent an apartment with a low credit score
Some landlords may be flexible and willing to rent to people who have a less than ideal credit score and people who don’t have a credit score for an apartment. Here are some strategies to consider:
- Provide proof of rental payments. Showing cancelled check images or bank statement indicating rent payment may be enough to convince a landlord that you’ve paid your rent on time in the past.
- Provide letters of recommendation. Letters from your past landlord(s), parents, or others who can vouch for your financial responsibility are a good way to show a landlord that you have a history of financial responsibility.
- Get a cosigner. Some young adults will have a parent co-sign the lease. This means the cosigner will be financially responsible for the rent payments if the primary signer fails to pay.
- Provide proof of savings. Providing the landlords with your savings account or checking account balance statement that shows you have several months of living expenses saved up could put them at ease regarding your ability to pay rent.
- Pay more upfront. Paying a higher first month’s rent or security deposit may be sufficient to some landlords, as it shows you have rent money up-front.
- Get a roommate. Having a roommate can reduce the amount of rent you pay, making it more affordable for everyone.
How to improve your credit score
If you’ve been turned down for a rental apartment due to your credit score or want to
improve your credit score fast before you rent, try these strategies:
- Pay bills on time. Paying bills on time is critically important. This one factor can make or break your credit score.
- Pay off debt and keep credit card balances low. Paying off your credit card balances is beneficial to credit scores because it lowers your credit utilization ratio.
- Open new credit accounts only as needed. When you apply for a credit card you may initially see a small drop in your credit score.
- Don't close unused credit cards. Closing an old or unused card means you are essentially wiping away some of your available credit which would increase your credit utilization ratio, and negatively affect your credit score.
- Dispute inaccuracies on your credit reports. Under federal law, you are entitled to a free copy of your credit report once every 12 months from each Credit Reporting Agency (also called a Credit Bureau).
- To request your free credit report, visit www.AnnualCreditReport.com.
- Increase your credit limits. While it may seem counterintuitive to increase your credit limit while you are trying to decrease debt and restore credit, a higher credit limit can lower your overall credit utilization ratio, making your credit score increase.
Why savvy consumers choose CU SoCal
For over 60 years CU SoCal has been providing financial services, including mortgages, Home Equity Loans, HELOCs, car loans, personal loans, credit cards, and other banking products, to those who live, work, worship, or attend school in Orange County, Los Angeles County, Riverside County, and San Bernardino County.
Please give us a call today at 866.287.6225 today to schedule a no-obligation loan consultation with a CU SoCal Member Services specialist.
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