What are credit issues?
Credit issues refer to situations when prospective renters have either no credit history, or a low credit score.
- A credit score is a third party rating system that tracks your credit worthiness as a borrower. Credit scores range from 300-850.
- In essence, landlords use your credit score to assess if you can pay for rent over the duration of the lease.
- A low credit score for renting is below 550. If you are near this score, it will take some finesse to find apartments that will work with you. We know it’s very possible 😊
- While low credit won't automatically get you denied for an apartment, it can hold weight in the process.
- However, below 500, it becomes very hard to find apartments that will work with your credit.
<aside>
<img src="https://s3-us-west-2.amazonaws.com/secure.notion-static.com/43957ad6-0457-44d9-b0c7-ae1655b211fb/Green_Logo2.png" alt="https://s3-us-west-2.amazonaws.com/secure.notion-static.com/43957ad6-0457-44d9-b0c7-ae1655b211fb/Green_Logo2.png" width="40px" /> Lighthouse: Tips For Credit Issues
- Look for “No Credit Check” properties
- Pay rent in advance (if you can!)
- Get a co-signer, guarantor, or roommate
- Paying a higher deposit or rent
- Agreeing to a shorter lease
- Showing great rental history or high salary
</aside>
What is a credit report?
A credit report is an assessment of your credit, by one of the three major credit bureaus (Experian, Transunion, Equifax). A credit report typically tracks:
- Your bill-paying history
- Your current unpaid debt
- The number and type of loans you have
- How long you have had your loans
- How much of your credit you’re using
- Any new applications for credit
- Whether you have had a debt sent to collection, a foreclosure, or a bankruptcy, and how long ago
- Unpaid rent and rent-related expenses left unpaid (visible for 7 years)
It is important to have a clear picture of their personal credit, background rental, and criminal histories when they begin searching for an apartment. You can access all three reports from the above credit bureaus through Credit Karma.
What is the criteria across apartments?
Every apartment community has its own criteria for accepting new tenants with credit issues.
If your record is not to standard, it can be automatic rejection. If your credit score is borderline, other factors can have a significant impact. In order to approve you, some apartments may ask you for a larger deposit.
However, most require certain items to be paid off before approval or move in:
- Utility bills
- Tax collection judgments
- Outstanding debts to other apartments (sometimes)
Other issues are acceptable to some apartments on a case by case basis:
- Medical bills
- Repossession
- Some Judgements
How to build your credit score?
- Borrow money and pay it off
- Try products like Kikoff / (…)
- Avoid late fees and overages
- Be reluctant to borrow money