Do apartment credit checks affect your credit score?

There’s no denying the importance of credit checks. Whether you are applying for a mortgage loan, buying a home, or renting an apartment, a credit check is how your lender or landlord will gauge your worthiness. But, how do hard credit inquiries on your credit score affect your score? Do apartment credit checks, especially multiple checks, hurt your credit score? 

If you’re looking for your next apartment, you should be prepared for multiple credit checks by prospective landlords. 

The good news is that while these inquiries show up on your credit report, they are not really harmful.

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What are apartment credit checks? 

An apartment credit check reveals your entire credit history. It includes details about your bank accounts, credit card balances, outstanding loans and debts, and pending payments. It’s a good way for landlords to assess whether potential tenants are likely to pay their rent on time or not. It shows your creditworthiness and financial situation and ensures the apartment owners of a responsible tenancy. 

Keep in mind that prior to performing a credit check, the landlord will require written authorization from you. It is typically in the form of a signed credit screening document or rental agreement.

Why do apartment credit checks happen? 

If you’re looking for a rental property, your apartment owner will want to check your credit history. They carry out credit inquiries to ascertain that you will not be a financial risk. That is to say, you will be able to pay your rent every month. That’s why most landlords run an apartment credit check on prospective tenants.

An applicant with a good credit score, a solid credit report, and proof that they pay their bills on time gives the landlord confidence. And, a potential tenant with a bad credit score is a big no-no!

How do apartment owners carry credit checks?

To obtain a credit report, landlords can approach tenant screening companies, landlord associations, or directly contact the three major credit bureaus: Equifax, Experian, and TransUnion.

When requesting your credit report, they will require your full legal name, Social Security number, date of birth, current and previous addresses spanning the past two years, and current and past employment information. Some landlords may charge an application fee that covers the cost of conducting a credit check. The duration of the apartment credit check process can range from minutes to several days.

Landlords also look for any evictions from other rental units, the debt amount you carry, and any default on a loan. 

What do apartment credit checks tell the landlord?

Here’s what a potential landlord hopes to find through a credit check.

A favorable overall credit score

Landlords will primarily focus on your actual credit details, starting with your FICO Score. While there is no specific minimum credit score, landlords often consider credit scores in the range of 600 to 620 as an acceptable threshold. A score above 670 indicates a positive credit history. However, this threshold can vary depending on factors such as your geographical location, income level, monthly rent, and the competitiveness of the local rental market.

Consistency in paying rent on time

Most landlords simply want assurance that you will consistently meet your rent obligations every month. By conducting a credit check, landlords can ascertain whether a prospective tenant has a timely payment history over several years. Furthermore, they can also verify if any previous landlords have reported any outstanding rental dues.

Employment track record and income

To ensure that you can comfortably afford the apartment rent, landlords will be interested in your job and income. Demonstrating long-term employment with the same company exhibits financial stability. And, it reassures the landlord of your ability to meet your financial obligations.

Level of debt

Through a credit check, landlords can access information about your existing debt. Generally, landlords prefer to ensure you do not allocate more than half of your gross income toward bills and rent.

Background check

Some landlords may opt to pay for a screening service that examines a tenant’s history, including bankruptcy filings, eviction records, criminal charges, delinquent accounts, or defaults on loans. Keep in mind that bankruptcies remain on your credit report for up to 10 years. While landlords do not expect a flawless credit record, they may deny those who have had a car repossession or credit card non-payment.

How to successfully pass your apartment credit check?

Enhancing your chances of securing an apartment involves reviewing your credit report before the landlord does. Under the Fair Credit Reporting Act, consumers are entitled to receive one free credit report per year. This can be from each of the three major credit bureaus. Ensure that you thoroughly examine your report for any errors and promptly rectify them. 

Are apartment credit checks hard inquiries or soft inquiries? 

A hard credit check refers to the process of pulling out your credit report for a potential new credit account. On the other hand, soft credit checks retrieve the same information but have a lesser impact on your credit score because they are not associated with a specific credit application.

When seeking to obtain a new line of credit, such as credit cards, car loans, mortgages, or loans from various financial institutions, they typically perform a hard credit check. This generally reduces your credit score by less than five points – more if you have a short credit history or few accounts. Such a hard inquiry stays on your credit report for up to two years. However, they only affect your credit score for 12 months.

Conversely, when landlords and property managers evaluate your credit history primarily to gauge your reliability in making timely payments, they conduct soft credit checks or soft credit pulls.

Generally, applying for an apartment does not result in any significant changes to your credit score. Unless you concurrently applied for a new credit line within the same timeframe.

How do apartment credit checks affect your credit score?

Apartment credit checks, also known as rental credit checks, typically involve a landlord or property management company reviewing your credit history and score to assess your financial reliability as a potential tenant. These checks are considered “soft inquiries” and generally do not have a significant impact on your credit score. Soft inquiries do not affect your creditworthiness and are not visible to other lenders or creditors. However, multiple credit checks within a short period, such as when applying for several apartments simultaneously, may raise concerns for lenders and could potentially have a slight negative impact on your credit score. It’s important to be mindful of excessive credit inquiries and manage your credit responsibly to maintain a good credit standing.

How to find yourself an apartment with bad credit?

If you have no credit history, or a bad credit score, worry not. You still have a few options to explore when looking for a rental property.

• You can find someone as a co-signer for the lease agreement. It could be a close friend or a family member with good credit who can commit to paying the rent if the tenant fails to do so.
• You can show the landlord past utility bills, previous rent payments, rental history, and references from previous landlords to prove you’re a responsible tenant. 
• Show proof of good and consistent income.
• Offer to pay a higher security deposit or a good amount of rent in advance. 

Last thoughts

Landlords typically seek assurance of financial responsibility from potential tenants before finalizing a rental agreement. This involves conducting an apartment credit check on all applicants. Demonstrating a positive credit history and timely bill payments assures landlords that they are likely to get their rent on time.

Written by Ramona Sinha. June 20, 2023

Ramona is a content writer for Kukun. This experienced blogger uses simple and succinct words to decipher the complex phenomenon called life. An avid traveler, she’s a digital nomad at heart and an animal lover from the depths of her soul.