Article Updated July 20, 2018
You’ve found the perfect place to rent, and now the property manager tells you all you need to do is fill out an application, so she can run a credit check—gulp.
Whether you’ve got great credit, bad credit, or no credit, credit checks probably make you a little uneasy. What if there’s a problem?
To help you feel more at ease, we are going to answer some common questions about landlord credit checks, preparing yourself for one, and your options if your credit isn’t stellar.
In This Piece
Can a landlord really check your credit?
What’s included in a rental credit check?
Who pays for a rental credit check?
What if there’s a problem with your credit report?
How do you check your own credit score?
Can you rent if you have bad credit?
Can you rent if you have no credit history?
How to pass a rental credit check
What to watch for as a tenant
Can a Landlord Really Check My Credit?
Yes, landlords and property managers can legally screen you as a potential renter, and the screening process often involves a credit check. However, you must give your permission in writing. Your signature on the rental application may count as written permission, or you may be asked to sign a separate credit screening document.
Property owners generally check credit using services offered by landlord associations, tenant screeners, and major credit bureaus or by asking you for a physical copy of a report. Be prepared to give the landlord the following information if they intend to order the report:
- Full name
- Social Security number
- Date of birth
- Landlord Associations will supply tenant credit checks to the landlords for a fee. Depending on the association, the credit check may show up on your credit report as a hard inquiry which may cause a slightly negative drop in your credit score.
- Tenant Screening Services may also provide credit reports to landlords. However, some of these organizations may not. Some reports the landlord can request may also include any prior evictions, bankruptcies, or judgments, and any other background information they require prior to offering tenancy.
- Credit Bureaus also provide the landlords with the credit reports, however, these services that are offered by Experian, TransUnion, and Equifax are usually shown as a soft inquiry on your credit report, and they require you to initiate the credit check yourself.
What’s Included in a Rental Credit Check?
What landlords check in a rental screening varies. Some may check only your credit score. Others may require more information. These “tenant screening reports,” as they’re often called, frequently include various reports and details:
- Standard credit reports
- Credit scores or credit ratings
- Criminal and sex offender background checks
- Residence and eviction histories
- Employment verification and histories
Some landlords may also check your public bank and legal records and even dig into your social media profiles to uncover anything they’d consider unacceptable.
“People don’t realize there is a full tenant screening. It’s beyond (a standard credit report) in most cases, particularly in the case of a large rental company,” says Rod Griffin, director of public education for Experian.
The format of these reports depends on the company supplying them, but in terms of credit information, a report should generally contain the same credit details you would see if you ordered your own credit report.
Here’s what landlords usually see in standard credit checks:
- Loans (current and past)
- Bankruptcies, foreclosures, and short sales
- Minimum payment amounts for debt accounts
- Late payment histories
- Credit histories
- Credit scores
Who Pays for a Landlord Credit Check?
With a rental application, you’ll most likely pay for the credit check. The check is usually included in the application fee. Concerned about paying that fee when you’re not sure you’ll be approved? You may not have a choice, but if you do, consider the DIY credit check strategies below.
What if There’s a Problem with My Credit Report?
Many landlords consider credit one of the most important parts of making a leasing decision. What credit score is needed to rent a house can differ from landlord to landlord, but you can expect the minimum to be somewhere between 600 and 620.
Certain items may be deal breakers for property owners, however. These could include the following:
- Car repossessions
- Credit card charge-offs
- Accounts currently in collections
Other things that matter to most landlords besides credit include income, criminal history, and eviction history.
If a landlord uses information from a consumer report to take “adverse action” against you, they must give you the reason in writing and include information about how to order your own free credit report.
In other words, if your report contains something negative that the landlord uses to make their decision, you’re entitled to know what this is, and you can request a free copy of your report.
Adverse action can result in a denial of your application, but it can also include a requirement for a cosigner, a request for a larger deposit, or an increase of the monthly rent offer, according to the Federal Trade Commission (FTC).
What can you do to ensure there are no surprises? Check your own credit in advance and tell the landlord about any potential problems that could be an issue.
How Do I Check My Own Credit?
Will you be renting a home or apartment in the not-too-distant future? Prepare yourself by getting your credit report in advance. An easy way is to sign up for a free credit score from Credit.com.
The score a landlord receives may be a slightly different number, but all credit scoring models generally take into account the same five factors:
- Payment history
- Debt amount
- Account mix
- Credit history age
- New credit accounts
With your own credit report in hand, ask the property manager or landlord to review the report and see whether it’s worth it for you to apply. You can also ask them if they’ll let you use a service like Experian Connect to purchase a credit report that you can share with people you authorize. Equifax offers a similar service called Identity Report, and TransUnion’s service is called SmartMove.
The landlord may still want a full tenant screening, but if you can provide your own credit report up-front, they can tell you whether you have a chance before you agree to lengthier—and possibly pricier—processing.
Can I Rent if I Have Bad Credit?
If you have bad credit, you might be wondering whether you can rent at all—but don’t worry!
“Just because you have bad credit doesn’t mean you aren’t going to pay your rent on time,” says Matt Briggs, founder of RentTrack, a company that helps renters build their credit by paying through an online portal.
Landlords know that renters usually don’t have perfect credit. Often the biggest concern is whether you pay your rent on time. Historically, information about rent hasn’t been included in standard credit reports and confirming on-time rent payments can be a tedious process of contacting former landlords.
But recently, some rental payment history has started to appear on some credit reports, and companies like RentTrack can help people build credit through on-time, trackable payments.
“Experian was the first company to include positive rent information in credit reports,” Griffin explains. Experian gathers this information from three companies: ClearNow, WilliamPaid, and RentTrack.
When tenants pay rent using one of these online platforms, the payments get reported to Experian—and TransUnion also reports rental payments when available. However, note that you or your landlord have to sign up for one of these services for your rent payments to be included in your credit file.
It’s also important to note that if you’ve had unpaid rental payments that were eventually turned over to a collection agency, the collection account will show up on your credit report. Accounts in collection can severely lower your credit score, making it more difficult to rent another place in the future.
So be prepared to explain your situation if necessary and take steps to pay off those accounts to show that you’re committed to meeting financial responsibilities.
Can I Rent with No Credit History?
If you’re a student, a recent immigrant, or newly divorced, you may have a particularly hard time renting for the first time, especially if you haven’t established your own credit history.
But if you can find a place, consider paying rent through a rental payment reporting company like RentTrack to build your credit. In the meantime, a landlord may rent to you—even if you have no credit—if you can find a cosigner with good credit. To increase your chances of approval, you could also offer to pay the first and last months’ rent or a higher security deposit.
If none of those options work, consider looking for a cheaper place to rent where the landlord may have less strict credit requirements.
Once you’re in, start building your credit. Pay down balances on your credit cards, make all payments on time, pay more than the minimum payments, and avoid carrying large balances on your accounts.
How to Pass A Rental Credit Check
If you feel that there is even the slightest chance you may not pass a rental credit check, there are a few things a potential tenant can do that will hopefully improve your chances.
- Find someone to co-sign for you so the landlord has a guarantee that they will get the rent payment, even if you were to default.
- Be completely honest and up front with the landlord about your finances and show them the progress you have made regarding paying your debt and rebuilding your credit.
- Offer to pay the rent in advance or offer more for the security deposit to show good faith and your intent to pay what you owe
- Make sure to show the landlord solid proof of your monthly income or offer to allow them to take the rent via direct deposit
- Pay a bit more for monthly rent as a compromise. However, this would probably want to be very last on your list of things to do
Landlords are always looking for that perfect tenant, so they have little to worry about especially when it comes to their rent being paid on time. Either as a potential tenant or a landlord, you should educate yourself and always be aware of different scams that may be going around. Federal Fair Housing Guidelines, as well as the standards of tenant screening, should always be followed and adhered to, and if there are any red flags, you should dig a little deeper for more information.
What to Watch for as a Tenant
It is best to find a landlord that is not long distance because this can certainly be a red flag for any tenant. If the landlord is not in the area, then typically they will use some kind of management company or other type of property managers to help oversee the properties. If this is not the case, you may want to be wary of a scam the landlord might be pulling on his tenants.
Never go by an oral lease. Always have your lease in writing and retain the signed copy for your own records as well. If the landlord is not willing to offer you a written lease, then this should be a red flag and may mean they will try to scam you out of money.
Finally, if the landlord doesn’t have a tenant screening process in place as discussed above and does not utilize tenant screening services at all, then you may find that the landlord isn’t as high quality as you would expect. It may mean that they don’t care as much about the property or they may be running some kind of scam.
Just like a landlord is always on the search for the quality prospective tenant by running tenant screening reports and checking credit reports; the tenant should also do their research on the type of landlord they are going to have as well.
More on Credit Reports and Credit Scores:
- How Renting Can Impact Your Credit
- 5 Tips for Renting a Home with Bad Credit
- Can You Be Denied an Apartment Because of Bad Credit?