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Why Your Credit Score Matters When Renting

Sacha R - Monday, August 05, 2019

Credit score report on a table

So, you’ve found the apartment of your dreams. Congratulations! Now it’s time to complete and submit a rental application, which often includes a credit check.

A question we hear often is “why does my credit score matter?”. The short answer is that good credit will make you stand out while bad credit may prevent you from renting your dream place. Keep reading to find out more!

Credit History Matters as Much as Your Credit Score

You may have a good score now, but has it always been that way? If there is a pattern of weak credit over a long period of time, that’s a red flag that a person isn’t good with money. However, one dip in credit score due to a divorce or illness is less likely to make a negative impact.

The details in a credit report, including late payments, evictions, and bankruptcies paint your financial story. A series of late payments combined with several evictions will raise major red flags in the eyes of a landlord.

A credit report can tell a good story as well! It includes information on on-time payments, social security number, and date of birth.

Own Up to Your Mistakes

Before you submit your rental application, run a credit report yourself. You can order a free credit report from each national consumer credit reporting company (Equifax, TransUnion, and Experian) once every 12 months. By running a report, you can know exactly what the landlord will be looking at as well.

If there are any red flags you can formulate responses and explain the reasoning behind them. Provide the explanations with the application so the landlord doesn’t have to ask for them. Owning up to your mistakes will show that you can take responsibility for your actions and have learned from them.

Start Working on Your Credit

There are things you can do today that will start to improve your score almost immediately. There are five major factors that influence your credit score. The two most important are your payment history and the amounts you owe. Make a habit of paying bills on time (you can even set up autopay) and try to only use a small portion of the credit that’s available to you. If you have a credit card with a limit of $5,000, try to keep the balance below $1500.

What to Do If You Have A Bad Credit Score

A clean criminal background, job stability, high income, a healthy savings account, and positive references from past landlords can help your case. If you have all of those and a poor credit report, you should still have a good rental application.

If you’re still concerned, a roommate with a good credit score can ease the landlords worries. You can also ask a friend or relative to co-sign the lease. Just remember, whoever you ask is responsible for the rent payment if you’re unable to make it.

There are several financial fixes you can take as well. Put up a larger security deposit, pay several months’ rent in advance, or set up automatic payments so your landlord knows they’ll receive their money. You could also agree to pay slightly more in rent each month if it’s truly your dream apartment.

Yes, Your Credit Matters

Long story short, your credit matters. However, with the right knowledge of your own financial history, it won’t make or break your application. Prepare explanations, start improving your credit score, and ask for recommendations so you can be on your way to moving into a new apartment!

Is Hawthorne Gardens your dream apartment? Start the application process today!

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