What Credit Score Do You Need to Rent a House?

for rent sign by townhomes
Rent sign | PAUL J. RICHARDS/AFP/Getty Images

Buying a house can be a brutal financial process, not only because of the new mortgage you’ll be gaining but also because of ongoing maintenance and other costs that continue to add up. Many people are choosing to delay the purchase process on homes, either because they can’t afford the down payment or because they’re still trying to get out of their parents’ basement, let alone afford a picket fence. While finding a rental could be just as expensive in some cities, in most areas it can be a stepping stone to eventually making payments on a mortgage and coughing up the cash for a down payment.

No matter whether you’re looking to buy or rent, you can guarantee that your credit history will come into play at some point. You’ll get a better deal on car payments when you have a high credit score, and the same is true for most purchases when you’re taking out a loan or making regular monthly payments. The credit vetting process will be less intense if you’re looking to rent a single-family home instead of buy one, but you can almost guarantee your credit history will be a part of the application process.

Will landlords check your credit score and report?

These days, checking your credit history is just as common as landlords asking for proof of employment and conducting a criminal background check, said Greg McBride, Bankrate’s chief financial analyst. “Absolutely expect landlords to check [credit] for rentals, be it apartments or renting homes,” McBride said. However, your credit score and report likely won’t change the price of the rent, like it would on a car or mortgage payment. “I don’t know that it affects the pricing, particularly on a single family home as much as it factors into approval or denial,” McBride explained. 

In other words, your credit history plays a part in the rental process, but it’s used primarily as a means for eliminating candidates who might not be a good fit. A good credit score and report won’t necessarily mean you’re a shoo-in for renting a home, but a poor credit score and report could mean you’re cut from the applicant pool quickly.

While a good credit score will likely hint at a positive credit report, the scores don’t matter quite so much as the report itself, McBride said. If your credit score is in the fair, good, or excellent ranges (generally around 650 and above), you’re not likely to hit many bumps in the road when it comes to renting a property. Several Realtors from around the country posted in a forum that generally applicants aren’t excluded for scores above 600 or 650. However, far more mentioned the credit report itself — which is what McBride says is the bigger determinant.

Red flags on a credit report

Source: iStock
Credit report | Source: iStock

When you’re renting a single family home instead of an apartment, you have a greater likelihood of dealing with an individual homeowner instead of a rental company. There are slight differences between the two, McBride said, which can factor in items other than your credit score. “They’re making a greater emphasis on their part in terms of screening applicants,” he said. “Not just for their ability to meet the financial obligation of renting, but also, will they make good neighbors?” 

When it comes to the money side of the equation, the credit report shows a more in-depth view of a person or couple’s history. The landlord will be able to see any red flags that come up as a result. There are things you never want to see on your credit report — not only for rental purposes — but also because they could spell financial trouble. If the IRS is garnishing your check for back taxes, you have collections agencies after you, or the bank foreclosed on your previous home, it could serve as a red flag for the landlord that you might not be the most financially responsible tenant.

How to improve your credit

Many people looking to rent a home have credit scores and reports that might not hold up under bank scrutiny for a mortgage, McBride said. In some cases the housing market bust several years ago could have led to foreclosure, or a number of other unfortunate factors could have combined to make it almost impossible to secure a loan.

However, renting a property is a good way for those with less-than-stellar credit to improve it, McBride said, all the while waiting until the time is right to secure a better mortgage rate on a house of their own. Depending on the circumstances, a credit check might not bear much weight in the rental process to begin with, McBride said. However, if you are concerned about what’s in your report, McBride suggested including a personal narrative on the report explaining any missteps. Mention if you had a period of joblessness (that’s hopefully now over) that affected your ability to pay your bills on time, or if you encountered financial problems during the housing crisis.

If the landlord is open to dialogue and you think your chances of getting a rental are at risk, you can also offer to pay a larger security deposit, McBride said. “It’s just a way to mitigate risk,” he explained. Landlords then have a way to guarantee they’ll recoup more of their money, and tenants have a larger incentive to pay on time for the duration of the lease.

If you are hoping to improve your credit report and score, there are some ways to do so even without using a credit card. Your track record of payments is the largest factor for your credit score, so making consistent payments on open lines of credit is important, too. Finally, you need to actually know what your credit score is and what your credit report contains. You are entitled to one free credit report each year from AnnualCreditReport.com, which can provide your report from each of the three credit reporting agencies — though plenty of other resources offer free reports, too. By knowing this, you’ll know what to expect during the home rental process.

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