Credit scores are important for many aspects of life–even renting a home. For instance, when you apply for a rental home, your landlord may pull your credit as part of the screening process. After all, your credit history shows how you’ve managed money in the past and can indicate whether you might be a responsible tenant. That’s why having a good credit score while renting is crucial. Join us as we review credit scores and why you need a good score while renting.
Contents of This Article:
- Why Do You Need a Good Credit Score While Renting?
- Factors That Influence Credit Scores
- How to Improve Your Credit Score
- Can You Rent With a Low Credit Score?
- Talk to a Property Management Company Today
Why Do You Need a Good Credit Score While Renting?
You may think that your credit score doesn’t matter while renting. However, that’s not the case. Instead, your landlord or Philadelphia property managers may check your credit history to ensure you can make monthly payments. If you have poor credit and fail to repay the debt you owe, you could be denied rental housing.
For many significant purchases or life experiences, your credit score matters. Whether you’re applying for rental housing, buying a house, or taking out a loan, you need to have good credit. Credit scores generally range from 300 to 850; the higher your credit score, the better. A higher score indicates that you manage your finances and pay your bills on time.
It’s important to note that your credit score can differ depending on several factors. For instance, your score could be low due to a lack of credit experience, high utilization, or bankruptcy due to unforeseen circumstances. Ultimately, you’ll want to have a good credit score while renting real estate.
What Do Landlords Look For?
When landlords look at your credit history, they examine a few factors. For instance, they want to see your overall credit score, payment history, bankruptcies, foreclosures, and overall credit activity. After all, they want to ensure you can pay your rent each month and pay for potential damages, should they occur.
A lower credit score doesn’t automatically mean you’ll be denied rental housing. However, your landlord or property manager will likely dive further to determine why your score is low. That said, as a general rule of thumb, most landlords look for a score of around 620 or higher.
Factors That Influence Credit Scores
Your credit score is a compilation of several factors, meaning several things make up your score. Here are the main factors that influence your credit score.
- Payment History- Your payment history shows whether or not you pay bills on time and accounts for about 35% of your credit score.
- Amount Owed- The total amount you owe on all accounts makes up 30% of your score, which includes the total amount of credit available and your utilization.
- Credit History- The longer your credit history, the better your score, as it makes up 15% of your credit score.
- Types of Credit- The types of credit you have accounts for 10% of your score. The more diversified your credit is, the better your score.
- New Credit- New lines of credit make up 10% of your score and shows how many new accounts you have.
How to Improve Your Credit Score
If you’ve been rejected for a rental due to a low credit score, there are plenty of ways to improve your score over time. The first step in improving your credit score is knowing where you’re lacking. For instance, if you don’t have a lot of credit history, you may consider opening a new line of credit or waiting to apply for rental housing until you’ve built up credit for some time.
Paying off your existing debt is an obvious way to improve your credit. It’s important always to pay your bills on time in complete payments. However, remember that consistent payments can take six months or more to see a difference in your credit score.
Another way to increase your credit score is by increasing your credit line to give yourself more credit with less utilization. Ultimately, the goal is to have long-term credit, on-time payments, little utilization, and avoid closing credit accounts.
Can You Rent With a Low Credit Score?
While it’s best to have a good credit score while renting, you can still get an apartment or rental home with a lower score. Depending on the reason for your low score, landlords may look at your circumstances and work with you. For instance, they may ask for a larger deposit or ask you to get a cosigner for your lease. However, some landlords or property managers may automatically reject you if you have a low score due to previous nonpayment.
If you can’t meet the minimum credit score to rent an apartment, here are a few ways you can still secure a lease:
- Explain Your Situation– Be honest about your credit history, as most landlords are open-minded once you explain your situation. For instance, if you’re dealing with medical bills or a recent divorce, your landlord may be more lenient about your credit score.
- Offer a Higher Security Deposit– Offer peace of mind to your landlord with a higher security deposit. That way, if you can’t make rent, your security deposit acts as a buffer.
- Provide Several References– Your credit score doesn’t depict who you are as a person. So, if you have references from previous landlords that prove your reliability, provide them to your new landlord or property manager.
- Use a Cosigner– Your landlord may require you to have a cosigner to live in their rentals. Then, if you fail to pay the rent, it’ll fall on your cosigner.
- Consider a Roommate– Landlords may be more lenient if you have a roommate to split the rent and living costs with.
- Pay Rent Upfront– Your landlord may feel more confident renting to you if you offer to pay several months of rent upfront. It gives you and your landlord more peace of mind knowing your bills are paid.
Talk to a Property Management Company Today
Ultimately, it’s important to have a good credit score while renting. So, if you’re unsure of your credit score and want to get a better idea of what landlords or property managers are looking for, contact them!
If you’re looking for a rental near Baltimore, Philadelphia, Northern Virginia, or Washington, DC, reach out to Bay Property Management Group. If you have any questions, our dedicated property managers will ensure you get the information you need while applying for rental housing.
Contact BMG for More Information Today!On the other hand, if you’re a rental property owner and want to improve your tenant screening process, we can help with that, too. Whether you need help marketing, communicating with tenants, collecting rent checks, or performing maintenance, we’ve got it covered. Contact BMG today to learn more about our comprehensive rental management services.
