Table of Contents
- 1 How Credit Score Affects You as a Renter
- 1.1 What is a credit score, and how is it calculated?
- 1.2 How does your credit score affect your ability to rent an apartment?
- 1.3 What can you do to improve your credit score?
- 1.4 Tips for renting an apartment with bad credit
- 1.5 Alternatives to renting an apartment if you have a low credit score
- 1.6 Resources for improving your credit score
How Credit Score Affects You as a Renter
Your credit score is one of the most important numbers in your life. It can determine everything from the interest rate you get on a car loan to whether you’re approved for an apartment. So if you want to rent an apartment, it’s essential to know how your credit score affects your chances.
What is a credit score, and how is it calculated?
A credit score is a numerical representation of your credit history. It ranges from 300-to 850, with the best possible score being 850. The score is determined by five factors
which are late or missed payments, patterns in making payments, types of accounts with balances, length of credit history, and the number of accounts with balances.
The best way to understand your credit score is to look at it like a report card. A high score means you’ve always paid on time, have low balances, and show signs you can manage different types of debt well. A low score means the opposite: missed payments, showing you struggle with managing balances and not having established credit.
How does your credit score affect your ability to rent an apartment?
A low credit score is the biggest reason for denial regarding renting an apartment.
Landlords use FICO scores in tenant screening because of so much data about consumers’ general payment habits, including whether they pay their rent on time.
Because a credit score is a number that represents your payment habits, it’s a good predictor of whether you’ll be able to pay your future rent. Renters with low credit scores can have their applications denied or face steep fees for paying late and other penalties. Landlords also use applicants’ credit scores as proxies for income when qualifying them for loans, regardless of whether they plan on renting out the property.
What can you do to improve your credit score?
Even if you have bad credit, there are some things you can do to start improving it.
First of all, check your credit report and make sure there are no inaccuracies that might be dragging down your score. Next, try to pay down debt, particularly high-interest credit card debt, so you have more money for rent payments each month when the time comes.
Tips for renting an apartment with bad credit
If you’ve been turned down by landlords in the past because of low credit scores or have had past issues with paying your rent on time, there are a few strategies you can use to find the right place.
First of all, apply for a pet-friendly apartment; this will allow you to bypass their credit check and focus solely on your pet’s qualifications instead. If you must apply for an apartment that requires a full background and credit check, be sure to use a co-signer. Co-signers are people who agree to take responsibility for the full cost of the rent should you fall behind or fail to meet your obligations.
Alternatives to renting an apartment if you have a low credit score
If your personal credit history is preventing you from finding an apartment, consider these alternatives:
If you want to get out of the shelter system, seek subsidized housing through government social programs such as Section 8 housing. You can live with relatives or friends until your credit score recovers, and you’re able to rent an apartment on your own. You could also consider living in a homeless shelter if it provides long-term accommodation, particularly if you have children.
Resources for improving your credit score
If you want to improve your credit score or take on new types of debt, here are some useful resources:
CRAs will help you correct inaccuracies in your report and ensure they reflect good credit habits, such as paying on time. They can even explain what information is being reported and why. On the other hand, you should be careful about taking on new debt if your credit score is low. You might have to pay a lender an extraordinarily high-interest rate to get a loan or line of credit because they don’t know whether you’ll be able to make monthly payments in the future.
Summary
In conclusion, a low credit score is the biggest reason for denial when it comes to renting an apartment. Landlords use FICO scores in tenant screening because so much data is available about consumers’ general payment habits, including whether they pay their rent on time. Because of this, you can’t afford to take steps towards improving your credit if you want to find rental accommodations. Things like checking your credit report and paying down debt will help improve your situation long-term, as well as some other tips that we’ve provided here today!