This is the Credit Score You Need to Rent an Apartment in 2023
When renting an apartment is not always about budgeting and the area. You need to know your credit score also known as the FICO score. This is a simple way a landlord will know if you are creditworthy or a risk based on your previous financial history.
Why is it so important for a landlord to know your credit score if it’s only an apartment? Because it details your history of paying off debt on time and the landlord will use this to see how likely you will pay your rent on time. That means in the landlord’s eyes those 3 digits will determine if you will get approved or not, according to the Local Records Office.
How is My Credit Score Calculated?
A credit score is broken down into three categories; poor, fair, and excellent. These three categories will determine if you will get approved for a credit card, home loan, and even a car loan. Credit scores range from 300 (poor credit) to 850 (excellent credit).
Scores of 300 to 579 are usually poor. 580 to 669 is fair, 670 to 739 is good, 740 to 799 is very good and 800 and up is considered excellent starting in 2020.
How Do I Check My Credit Score?
There are three major reporting sources, Equifax, Transunion, and Experian. Free apps like Credit Karma offer free credit checks without any hidden fees or strings attached. Checking your credit is called a soft inquiry which won’t affect your score in a negative way. Therefore, check it as often as you like. On the other hand, a hard inquiry is when you apply for a line of credit and a potential lender reviews your credit information, which may hurt your score.
“Keeping up with your credit score and knowing what you need to work on is key to improving your score. Many people think a poor score will go away on its own but in reality. It won’t,” says, Francisco Torres a financial advisor from iMoneyTree LLC in Los Angeles, CA.
The most common way of hard inquiries is often done when someone tries to apply for a credit card at department stores or electronic stores. Stores will lure in young people or the elderly with offers like ‘no fees for x amount of time’. But, in the end, they end up paying more.
Due to the Coronavirus pandemic of 2020-21, many renters and homeowners across the United States have suffered financial impacts that were helped by the CARES Act.
What is the Lowest Credit Score Needed to Rent an Apartment?
In a perfect world, landlords will only rent to renters with excellent credit but that’s always the case. Anyone with a score of 600 and below will have a hard time getting approved. People with lower scores will likely have a high-security deposit and will have to pay 2-3 months’ rent upfront.
If we do the math for an apartment that’s $1,500 a month. A person will a low credit score will have to pay $1,500 + $3,000 (security deposit) + 2 months rent upfront of another $3,000, which will equal $7,000. For the average working family, $7,000 is a lot of money.
How Credit and Credit Cards Work – Video
I Have a Low Credit Score, What Should I Do to Avoid a High-Security Deposit?
Having a low credit score isn’t the end of the world; actually. It’s pretty common for many college students with student loans to have poor credit. The goal is to work on it to make it better.
The best way to avoid ridiculous security deposits is to have a co-signer. This will help the landlord to feel more secure. Providing proof of a steady job and pay stubs to prove you meet the landlord’s income requirements will help you avoid rejection.
“Making your landlord and property management company feel secure. This is the best way to avoid high fee and rejection” adds, Torres.