Your credit score can affect many aspects of your financial life, including your ability to rent an apartment. Along with your income, your credit score is a key factor on most apartment applications. Landlords use your credit score to gauge whether you will reliably pay your rent on time. A bad credit score makes finding an apartment more difficult, although not impossible.
A credit score of 680 or higher is considered "fair or better" and generally makes renting an apartment easy. According to a study conducted by the credit bureau Transunion, among tenants with credit scores of 680 or above, only about 10 per cent ever faced a 90-day delinquency on their rent. The likelihood of a 90-day delinquency was much higher among tenants with a credit score of below 650 (31 per cent) and 600 (51 per cent).
Getting Your Score
Your credit score is compiled by each of three bureaus--Equifax, Experian and TransUnion--and reflects your ability to pay back debt and pay your bills. The bureaus collect information from landlords, utilities, insurance companies and credit card companies to generate the score. You can get your scores from all three bureaus by signing up for a free 30-day trial at freecreditreport.com. If you do not want to end up paying for the service, simply cancel within 30 days.
Overcoming a Bad Score
In some cases, such as with smaller apartment buildings and single-family homes for rent, the landlord might not require a credit check. If a credit check is mandatory and your score is low, you still may be able to rent the apartment by putting down a bigger security deposit. It is not out of the question to be asked to put down three to six months' rent as a deposit if you have a bad credit score. You can try to negotiate a payment plan for your security deposit, but be aware that failure to pay the deposit on time could result in immediate eviction.
Your Credit Check
One strategy if you have a low credit score is to ask whether you can provide the report instead of having the landlord initiate a credit check. In this scenario you can include a letter that explains any issues with the report and paints your credit situation in the best light. This action, in combination with a letter of reference from your previous landlord, is often enough to mitigate your bad score. Also, too many "hard checks" on your credit by landlords or companies can have a negative effect--albeit a small one--on your score.
Get Some Backup
If a landlord is set to reject your application, you still might be able to sign an apartment lease if you get a guarantor who is in better financial standing than you. A guarantor is a co-signer from whom the landlord will seek payment if you violate the rental agreement. Guarantors can be a friend or relative, or you can hire a company such as WeCosign Inc., which cosigns your lease for a monthly fee.