This is part 3 in a series on how credit scores can impact more than your ability to get a loan. Previously, we discussed insurance and employment.

Renting | Your Credit Score affects a lot more than credit

Clients often seek our help with their consumer debt issues.  We help clients with debt related to credit cards, medical bills, foreclosures, garnishments, or repossessions.  Often times we find that their best solution is to file for bankruptcy.  After this determination, the next question is usually, “how will this affect my credit score?” or “will I still be able to get a loan?”  The short answer is, it depends and yes.

Many of our clients are aware that their credit score impacts the ability to get a loan or credit card.  However, most people do not know that credit scores also impact other areas of their life.  Over the next few blogs I will examine how your credit score affects insurance, renting, employment, and even utilities.

Today we will look at the impact of your credit score on renting.  In general, whether you’re trying to rent a house or an apartment, there is a good chance a landlord will ask to look at your credit report.  The landlord will use your credit report, employment history, bank statements, rental history and overall financial stability before deciding whether you will make a good tenant.  There are also landlords who will not use your credit report in determining whether or not you’ll make a good tenant.

What if I have a low credit score?

Even if you have a low credit score, there are a number of ways to show the potential landlord that you are going to be a good tenant who pays their rent on time.  The first thing you can do is to get a recommendation from a former landlord.  You can get something in writing or give your potential landlord the contact information for your old landlord.  This gives your potential landlord an opportunity to contact your old landlord to confirm that you were indeed a good tenant who paid their rent on time, regardless of what your credit score says.

Another way to increase your chances of renting with a low credit score is to offer the landlord more money up front.  This shows that not only do you have savings, but that you’re willing to part with those savings to secure a rental unit.  You may even be able to negotiate some sort of discount by paying more money up front as it would be guaranteed money for the landlord.

How can I increase my credit score?

There are a number of factors which will influence your credit score.  Some of those factors include: payment history, debts owed, length of credit history, new accounts, and balance of accounts.

One of the most important factors in your credit score is the amount of debt you owe.  This includes the number of debt accounts you currently have, the types of accounts (credit card, installment, collection, etc.), and their balances. It is best to have a few credit cards and open credit accounts with low balances.  In general, using only 30% of the available credit improves your credit score.

Another factor in your credit score is your payment history.  A long record of on-time payments demonstrates an individual who has been reliable for a significant period of time.  It’s vital to your credit score to always pay your bills on time.

Another factor is the length of credit history.  The longer your credit history with a certain account, the better.  These long payment histories can be for houses, vehicles or even credit cards.

Bottom line on renting

A low credit score may affect your ability to rent an apartment or house.  To give yourself more rental options you should:

  • (1) increase your credit score; and
  • (2) use some of the tips above to increase the likelihood of a landlord renting to you in spite of your low score.

If both those options fail, look for a landlord who does not check credit scores to determine a tenant’s rental payment ability.