A credit score is a number between 300 and 850 that is related to how likely you are to repay debt. Lenders, banks, and landlords or building management companies check your credit score to help them decide if they will approve you for a loan, credit card, or an apartment rental.
What credit score do I need to rent an apartment?
Most landlords require prospective tenants to have a credit score of 600 or above to approve their rental application. This number will be higher if you’re considering a particularly upscale rental, or if you're trying to get a place in a big city with a lot of renters, like New York or Los Angeles. If you’re worried that a negative credit history or score will keep you from renting an apartment, find out what you can do to improve your chances when renting with bad credit.
Where does my credit score come from?
Credit scores are created by credit bureaus, which are for-profit businesses that receive financial data from creditors such as banks, utility companies, property managers, and loan companies. Based on this information, the bureaus create credit reports for individual people and sell it to landlords and other interested parties.
There are three main credit bureaus, each of which operate differently. Your credit score may vary slightly between bureaus based on what information they receive about you and what they show in their reports.
Experian is the only credit bureau that notes how long an account will actively affect your credit. For each account that appears in your Experian report, there are details indicating the length of time the account will positively or negatively affect your score.
Equifax is the only credit bureau that organizes your debts by open and closed accounts. It also offers the option to view an 81-month long history of each account, when applicable.
TransUnion is the only credit bureau that reports detailed information about your employment status. Experian and Equifax will only report your employer’s name, while TransUnion also includes your position and dates of employment. TransUnion also color-codes your accounts when it shows your report, which indicates if you are current on payments or anywhere from 30-120 days late.
What factors affect my credit score?
Your payment history
This is a big one—payment history can account for as much as 35% of your credit score. A history of on-time payments will increase your credit score, while routinely paying bills 30 or more days late will significantly lower it.
Your credit usage
Credit card companies will assign you a credit limit when you sign up for a card. The less debt you build up on that card, the better your credit score will be. In general, you should be using less than 30% of your credit. If you have a credit card with a limit of $3,000, try to keep the balance due below $900.
How long you've had credit
Older is better when it comes to credit, since it proves you have experience managing debt. The ages of your accounts are averaged, and that age affects your credit score. For that reason, it’s best to have long-established credit cards that you’ve paid off regularly over time before you start opening new accounts or accruing new debt.
How many accounts you have
Creditors like to see that you have a diverse borrowing history. Having successfully paid off both loans and credit cards positively impacts your score.
Sometimes, having your credit checked too often can negatively affect your credit score. There are two types of credit checks—soft inquiries and hard inquiries. If you check your credit yourself on a credit reporting site, that’s a soft inquiry and will not change your credit score.
Hard inquiries are when you apply for credit with a company, such as a student loan, a mortgage, or a credit card. These inquiries show up on your credit history for two years and have the ability to affect your credit for one year. A hard inquiry can decrease your credit score by as many as 10 points. Tenant screening can include either kind of inquiry, so ask which kind will be used before you give permission for your landlord to run your credit background check.
Derogatory marks are long-lasting notes in your credit history that negatively affect your score. Common examples include filing for bankruptcy, foreclosing, or being put into collections because you missed payments on a debt. These marks can stay on your credit for seven to 10 years.
Renting in a major city is a competitive game, and a low credit score can make it hard to get an edge over other applicants. Build a profile on Flip to see if we will guarantee your rent payments—then apply for one of our listings as a guaranteed renter.
The information provided on this website does not, and is not intended to, constitute legal advice.
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