Credit scores are used by financial institutions and creditors to assess the potential risk of lending money or extending credit to a borrower. A good credit score is vital to achieving you personal financial goals, because it can impact an individual’s ability to borrow money, qualify for a mortgage or car loan, and even get approved for certain jobs.
In addition to the influence your credit score has on your financial status, it also plays a significant role in the process of renting an apartment. Landlords and property management companies use your credit score to evaluate your financial responsibility. The better your credit score the easier it will be to rent an apartment.
Read on as we explore the various ways in which credit scores are used in the rental process and the importance of maintaining a good credit score for rental purposes.
The rental screening process will normally be subject to a credit check, which is a process used by the landlord or property management company to assess the applicants credit history and credit score to assess their overall financial responsibility. Credit checks can be done through a credit reporting agency, like Equifax, the reports will include information such as the individuals credit history, outstanding debts and payment history.
Credit checks are just one factor used by landlords when evaluating potential tenants. Other factors included are
It is not unheard of for landlords to have a minimum credit score requirement that potential tenants must meet before their application will be considered. The minimum credit score requirements will vary from landlord to landlord, but overall a credit score of 650 or higher is often considered to be a good credit score for rental purposes.
A low credit score doesn’t you from renting an apartment, it only makes it more difficult to secure a lease, which is normally subject to consequences like,
These are unnecessary hurdles that can be easily avoided by retaining a healthy credit score.
A security deposit is a sum of money that is paid up front to the landlord at the beginning of tenancy. The security deposit is intended to protect the landlord in case the tenant damages the property or fails to pay rent. In most cases though, the security deposit is returned to the tenant’s at the end of the tenancy.
The amount of the security deposit can vary based on the property value, type and the landlord, but the deposit is normally equal to one or two months’ rent. Still, in some cases it could be even higher if the applicant has a lower credit score than what is required by the landlord or property management company.
One of the most important documents a landlord would review of a potential applicant is the applicants rental history. An individual’s rental history is a record of their past experiences as a tenant, including whether they consistently maintained their rent obligations and maintained the rental property according to the rental agreements with previous landlords.
A good rental history can help offset the negative impact of a low or below minimum credit score. The landlord may still require a higher security deposit, or a co-signor, but the individual would still have a chance of having their application approved.
A co-signor must have a good credit score and be willing to take on the financial responsibility of the rental agreement in the event you fail to meet the repayment obligations.
Both the co-signor and the applicants credit score and financial history will be considered as part of the rental application process. The co-signor’s help will offset the primary tenant’s lower credit score.
Credit scores play a significant role in the process of renting an apartment. Landlords and property management companies often use credit scores to assess the financial responsibility of potential tenants., having a good credit score will make it easier to be approved for a property lease.
Taking steps to improve your credit score will help increase the chances of being approved for the rental agreement without having to implement the various extra options available like opting to use a co-signor or higher security deposits. This is why you need to set up a consult with credit glory today to start your journey to financial freedom today!
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