When looking for a new place to rent, many factors come into play. One crucial element that often surprises potential tenants is the importance of their credit score. Landlords often rely on a potential tenant's credit score to gauge their ability to pay the rent on time. But figuring out what the minimum credit score you need could be difficult.
To help you get started, this article will explore what credit scores are, why they matter to landlords, and how they can impact your ability to rent a home.
What Is a Credit Score?
A credit score is a number that represents your creditworthiness. It's calculated based on your credit history, which includes factors like payment history, amounts owed, length of credit history, types of credit used, and recent credit inquiries. In the United States, credit scores typically range from 300 to 850, with higher scores indicating better creditworthiness.
Why Are Credit Scores Important to Landlords?
Landlords use credit scores as a tool to assess the financial reliability of potential tenants. A higher credit score suggests that you're more likely to pay rent on time and in full.
A credit report often includes your payment and rental history, evictions or debts, any unpaid credit card debt or loans, and bankruptcies. These factors are used by credit bureaus such as Equifax, Experian, and TransUnion to determine a person's credit score.
It is important to note that credit scores can differ depending on the bureau.
What Are Good Credit Scores?
Credit scores are generally categorized as follows:
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Excellent: 800-850
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Very Good: 740-799
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Good: 670-739
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Fair: 580-669
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Poor: 300-579
A "good" credit score is typically considered to be 670 or above while a fair credit score is in the 580 to 669 range. However, many landlords prefer tenants with scores of 700 or higher.
Can You Rent With a Bad Credit Score?
While a low credit score can make renting more challenging, it doesn't necessarily mean you can't rent at all. You can offer a larger security deposit, find a co-signer with a good credit score, or provide landlords references from previous landlords.
Additionally, you can look for no-credit-check apartments, which are rental units where landlords don't run a traditional credit check as part of their application process.
Can Credit Scores Be Improved?
If you have a bad credit score, there are some things you can do to improve it. These include:
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Paying your bills on time
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Reducing your credit card balances
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Keeping old credit accounts open
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Limiting new credit applications
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Checking your credit report for errors and dispute any inaccuracies
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Considering a secured credit card to build credit
Remember, while a good credit score can make renting easier, it's not the only factor landlords consider. Income, employment stability, and rental history also play significant roles in a landlord's decision-making process.
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