What Is the Minimum Credit Score You Need to Rent a House?
For those with poor credit, renting a house is difficult. Most landlords require tenants to have a minimum credit score to rent a house. But most people hardly ever check their own scores, nor know how to raise a low one.
Before you start looking for that perfect house to rent, consider researching your own credit score, and if it’s too low, take some time to try and raise it.
What is a credit score?
A credit score is a number that lenders use to evaluate your creditworthiness. Most often there’s an average credit score needed when it comes to renting a property since the score gives landlords insight into how you pay your bills. Credit card companies play a key role in your score since the number comes from your credit history.
A low credit score doesn’t necessarily mean you’ve handled your money poorly, it could simply mean you haven’t yet accrued enough of a credit history to bump your score up. Either way, knowing your credit score before you begin your search for a new home can make the process a lot easier.
Where does a credit report come from?
Three different credit bureaus generate credit reports — Equifax, Experian and TransUnion. Every time someone says they’re running credit checks, they’ll get reports from one or more of these bureaus.
The reason there are three different major credit bureaus is that each one can generate a slightly different report. Credit scores can differ as a result, so the person checking your credit may want an average score.
When running credit checks, the results are more than just your credit score, although that number is very important. The number, called a FICO credit score, is like a summary of your entire credit report. It’s the first place a landlord looks when screening tenants, but they may also want to look more closely at your entire credit history to assess how responsible you’ll be at making rent payments.
What are good credit scores?
The range of credit scores is pretty large. The lowest is 300, and the absolute highest is 850. This means there are a lot of numbers in between to qualify as the minimum credit score required to rent. The credit bureaus do put credit scores into specific ranges though. So, if your FICO score is between:
300-579: Bad
580-669: Fair
670-739: Good
740-799: Very good
800-850: Excellent
Most landlords want higher credit scores since that means you’ve shown responsible credit behavior previously. You’ve done things like paid your bills on time.
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Why do landlords prefer tenants with good credit?
Good credit and a higher credit score tell an honest story about you as a renter. Landlords can see your payment history on existing loans and bills, and then make an inference about how likely you are to pay rent on time and in full each month.
A lower credit score can raise doubts about how responsible you are when it comes to finances. Especially if your credit history shows late credit card payments or issues with paying bills on time, your financial stability may come into question.
If this pops up, your prospective landlord may want to reach out to a previous landlord to verify that your bad credit hasn’t affected your ability to pay rent in the past. They may also ask you to supplement your credit report to demonstrate that late payments are unlikely to happen.
What else are landlords looking at on your credit report?
Although your actual credit score number carries a lot of weight, a landlord reviews your entire credit report. Here’s what else they’re looking at:
Payment history and whether you make on-time payments for your bills each month
Rental history and if any previous landlords have reported this information to the credit bureaus
Unpaid rental history, which includes evictions and any outstanding money you owe a previous landlord
Debt size and whether you have a lot of credit cards or unpaid loans
Bankruptcies can stay on your credit report for up to 10 years
Each of these elements can flush out a credit score, explaining why it’s where it is on the scale, but also providing insight into any major red flags for you as a renter.
What is the minimum credit score to rent a house?
The minimum credit score you need to rent a house will depend on the landlord. Some landlords are willing to work with tenants with low credit, while others may require tenants to have excellent credit.
Going back to the credit score range, if your credit score is at least 670, you’re at the start of the sweet spot. If it’s within the fair credit score range (580-669), you may need to bring in a co-signer for your lease to reassure your landlord that you cover the rent payments.
This is why it’s important to know your credit score in advance of looking for a rental property. If you already know it’s on the lower end, you can come into the initial conversation prepared to discuss other options to convince a prospective landlord that you’re a good tenant.
Acknowledging, in advance, that the tenant screening process will produce a low credit score is potentially all it takes for a landlord to work with you. Even in a competitive rental market, you may find a sympathetic renter who will allow other sources to establish your ability to make on-time rental payments.
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What should I do if I have a poor credit history?
The best part of a credit score is that it’s not permanent. Your score constantly fluctuates, and you can take even a long credit history with issues and make changes to raise your FICO credit score.
You also don’t have to accept your credit score as the only measurement of your ability to pay rent. In lieu of a good credit score, you can show proof of your reliability when it comes to renting in other ways.
How can I improve my credit score?
There are a few things you can do to improve your credit score. First, make sure you’re paying your bills on time. Second, try to keep your credit utilization ratio low. And third, be mindful of your credit history.
If you have any negative marks on your credit report, try to get them removed. You can also use a credit monitoring service to keep track of your credit score and credit report.
If your credit score is low because you don’t really have a history of credit usage, change that. Establish credit by using secured credit cards once a month, and paying the bill on time.
Other things you can do to improve your creditworthiness:
Check your credit report for errors. Errors in your credit report can lower your credit score.
Pay down or pay off any outstanding debts. Lowering debt will help improve your credit score. If you have a lot of credit card debt, you could also look into ways to consolidate payments so it’s easier to pay it down faster.
Establish a good payment history. Making all types of payments on time will show landlords that you’re a responsible tenant. This includes debt payments in addition to monthly bills.
Apply for a credit card if you’ve never had one before.
Keep existing credit accounts open, even if you’re not regularly using them. This helps establish a long credit history.
Make on-time payments for all your bills. The more late payments you make the lower your score goes, so always pay on time.
Even if you’re unable to make an impact on your credit score before beginning your home search, providing proof of the steps you’re taking to make positive change can help convince a landlord you’d make a good tenant who won’t struggle with paying rent.
What can I do to supplement my credit score?
If you already pay your bills on time but are simply struggling with long-term debt that you’re actively paying off, you won’t necessarily be able to quickly raise your credit score. If something like this is the case, you may need to go outside the credit bureau generating your report and dazzle property managers in other ways to prove you’ll pay rent on time.
Get a co-signer
There’s no better way to raise a landlord’s confidence level in your ability to pay rent than to add someone else’s credit history into the pile. Bringing in a co-signer, with a higher credit score, and more reliable credit circumvents your low score.
Asking a close friend or family member to co-sign with you, though, makes them responsible for your rent if you fail to pay. For that reason, offer them a plan of how you’ll afford the monthly rent, along with a backup plan for repayment should they ever have to cover for you.
Provide character references
Having others validate your level of responsibility, even when the local rental market is tough, can push you closer to landing that perfect rental house. Despite your credit score, character references from past landlords or even your employer can establish you have the right traits of someone who pays rent on time.
Past landlords can provide the best reference since they can establish your rent payment history.
Share additional evidence
Credit reports aren’t always expressive of your current financial situation. A mistake in the past could follow you around for quite a while, so to establish why now is different, you may have to produce evidence outside your credit score.
Documents like your pay stubs and bank statements from a few preceding months can help establish a picture of your current financial situation. You can also provide documentation related to how you’re paying off current debt to show you’re making on-time payments.
If you’ve recently been awarded a higher credit limit, sharing that information can also support your case. A credit card issuer wouldn’t raise your available credit unless you deserved it. They want their money, too.
Offer something extra
If a landlord or property management company is still concerned about bringing you on as a renter, you can also overcome a lower credit score by offering more money upfront. You can do this in a few different ways.
Offer to pay a larger deposit upfront. Consider doubling the security deposit so that your landlord has a buffer if rent is late. You’ll get this money back once you move out, assuming you leave the home in good condition.
You can also pre-pay extra rent ahead of time. Your landlord may only ask for first and last month’s rent, but, if you can, offer to pay 3-6 months in advance to assure your landlord you have the funds to cover your expenses.
Consider a roommate
Bringing in a roommate means there will be two credit scores to review and not just yours. If they have a high credit score, a landlord may get the reassurances they need from your combined number than with yours alone.
Can I still rent with a poor credit score?
If no other strategy works when it comes to your credit score, there are no-credit-check landlords out there. While they’re harder to find and may have higher rent prices, going this route saves you from dealing with your credit score at all.
Searching online or even looking through the classifieds of your local newspaper are two great ways to find listings that don’t require a credit check. It may take a little longer, but by thoroughly searching, you can find a few rentals that don’t require your credit score to consider your rental application.
Having a low credit score doesn’t mean you can’t rent a house. It just may make the process a bit trickier. However, if you prepare in advance by working to raise your score, and compile additional evidence on why you’re a good renter, you may find a landlord who is willing to work with you.
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