Finding the perfect apartment or house to rent is almost like dating, with tenants and landlords both trying to find a good match. Just as you want to know everything about your future landlord before signing on the dotted line, they are also sizing up your tenant potential.
A prospective tenant’s credit score and overall credit history go hand in hand when a landlord considers a rental application. While a credit score measures your creditworthiness — the likelihood you’ll pay back debt — a full credit report provides at least five types of information a landlord can use in tenant screening.
Landlords want tenants who are likely to pay rent on time. Credit scores and reports demonstrate your history of managing your credit over the last 7 to 10 years, including how often you’ve made late payments on accounts and any current collection activity. A tenant credit check that reveals a high credit score and a history of on-time payments across multiple financial accounts will usually be viewed as representing responsible behavior. It assures the landlord you can meet the lease obligations.
A report showing late payments may lead to a frank discussion between you and the landlord regarding how you might rent a place with bad credit. Some landlords use negative credit information to set additional rental requirements, such as larger deposits or cosigners on the lease.
Evidence of Evictions
A landlord may also look for evictions when they’re screening a tenant. Evictions aren’t listed on credit reports, but there may be eviction reports drawn from other sources that are included alongside credit reports as part of a tenant screening service. While some states prevent landlords from using eviction information against prospective tenants, most allow landlords to refuse to rent based on any type of eviction activity. Even if you never went to court or if you ultimately won the case, a prospective landlord can use the fact that an eviction action was filed against you to deny your application.
Signs of criminal activity could show up on your credit report, most likely in the public records section. Unlike late payments, this type of information doesn’t fall off your record after a certain amount of time. Landlords may refuse to rent to applicants with criminal records, regardless of the severity of the crime or the underlying circumstances. Although under current civil rights laws, an arrest that doesn’t result in a conviction shouldn’t be the basis for denying housing.
A credit report also reveals any lawsuits filed against a rental applicant over the past 10 years. While pending civil lawsuits or judgments might not directly affect your history of paying bills on time, a landlord might see them as time bombs that have the potential to derail your finances in the future. A pending lawsuit against you involving a car accident might turn into a monetary judgment that exceeds the amount of your insurance, leaving you on the hook for the balance. Such a large financial obligation may ultimately impact your ability to pay rent in some landlords’ eyes.
Prospective landlords also look at a tenant’s employment status and income during the screening process. Some landlords require that applicants earn double or even triple the annual rental amount. In some cases, you can get a letter of recommendation from an employer to reassure your prospective landlord. For freelancers or people with unsteady incomes, it’s important to show patterns of income or a savings account that can prove to a landlord your ability to pay on time.