Best Rental Credit Checks For Landlords & Tenants

Credit Checks For Landlords & Tenants

Have you ever had a rental credit check? There are over 43 million housing units that are occupied by renters in the United States. If you are one of these renters you know how competitive it is to get the apartment of your dreams. One way that will give you an advantage over other applicants is to have a great credit score when your landlord does a credit check.

In this article, we will go over how you can check your credit before you apply, how to monitor your credit, and how to pass a rental credit check as well as how landlords can run a credit check and what they should look for. Everything you need to know about a rental credit check for landlords and tenants.

Table of Contents

Rental Credit Check For Tenants

Where To Check Your Credit Score For Free

How To Monitor Your Credit Score

Do All LandLords Do Rental Checks?

How To Pass A Rental Credit Check

Can You Increase Your Credit Score From Paying Rent?

Can I Still Rent With A Bad Credit Rating?

How Can I Convince My Landlord To Let Me Rent With Bad Credit?

Landlords: All You Need To Know About Credit Checks

How To Run A Rental Credit Check On A Tenant

What To Look For In A Credit Check

How Much Does It Cost To Do A Credit Check

What Is The Minimum Credit Score A Landlord Should Accept

Rental Credit Check For Tenants

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Where To Check Your Credit Score For Free

You can check your credit score for free on Credit Karma. Credit Karma allows you to track your VantageScore for free and also recommends financial products that could help you increase your credit score. Other ways you can check your credit score for free are if you already have credit cards open such as Discover It, Capital One, or Citi. These credit card apps allow you to check your credit scores for free.

While these places offer free access to your credit score some apps such as MyFICO will give you a better view of your credit score if you are actively looking to take out a loan, credit card, or mortgage.

Related: Should I Pay To Check My Credit Score?

How To Monitor Your Credit Score

You can monitor your credit score through apps like Credit Karma, myFICO, TransUnion, or through credit cards, you have such as Discover It, Capital One, or Citi Double Cash.

Related: 5 Best Credit Score Apps

Do All Landlords Do Rental Credit Checks?

Most landlords will include a credit check when you fill out an application for a rental. However, there are some landlords that don’t require a credit check. To find out if your potential landlord does require a credit check you can ask them in advance before you fill out your application. If your landlord does require a credit check and you don’t have good credit there are ways you can pass a rental credit check even with bad credit.

Tenants: How To Pass A Rental Credit Check

How To Pass A Rental Credit Check

If you have bad credit and you don’t think you would get approved for the apartment of your dreams you can do a few things that can help your chances of getting the apartment.

  1. Offer more money – While offering someone more money for something is never ideal, it will make you stand out as a candidate to the landlord and show them that you really want this apartment. You can offer to pay more monthly or offer a double security deposit.
  2. Advanced Payments – If you can show the landlord how serious you are about the rental you can offer to pay the first month of rent in advance because no landlord wants to pay for a vacant unit. This also shows the landlord you are financially responsible and put them at ease by renting to you.
  3. Cosigner – The best and most sure way of getting an apartment when you have bad credit is to find a cosigner that will sign the lease with you. This person will be legally responsible to pay your rent if you can’t.
  4. References – Landlords will most certainly contact your references to see what type of person you are and if you are responsible and trustworthy. Find some good professional references who can vouch for your character and financial stability. These people can help paint you in a good light to your new landlord especially. People to ask for references from could be co-workers, a boss, previous landlords, or even your bank.

A sure way that will increase your chances of getting a rental is to fix your credit score. The higher your credit score the more landlords and lenders will trust you and offer you better deals

Credit Repair Blueprint Course

Can You Increase Your Credit Score By Paying Rent?

Yes, you can absolutely increase your credit score by paying your rent. If you make on-time payments every month you can report these to the credit bureaus which will increase your credit score. On-time payments make up 35% of your FICO score so just reporting your monthly payments to the credit bureaus can greatly increase your score.

RentReporters is a program you can use to report your rental payments to Equifax and TransUnion, which is two of the three credit bureaus. You can start to see a change in your credit score in as little as 10 days and the average score increased by 40 points.

Related: How Can I Report My Rent Payments To The Credit Bureaus

Can I Still Rent With A Bad Credit Rating

You can still rent even if you have a bad credit rating. While it is ideal that you increase your credit score for the best chances and better apartments you can still get a rental with bad credit. You can find rentals that don’t require a credit check by looking on FaceBook or Craigslist, you can also use our 4 steps to pass a credit check we listed above to help get approved.

Related: The Easiest Ways To Increase Your Credit Score

How Can I Convince My Landlord To Let Me Rent With Bad Credit

If you have bad credit and you really want a specific rental, the best thing you can do is to send a letter to your potential landlord. In this letter, you should include your financial history and explain to them why your credit score is low and what you are going to do to improve it. Attach this letter to any professional references.

Sample Letter To Landlord Explaining Bad Credit:

Dear Landlord,

I recently applied for your rental at [rental complex name and address] on [date] and was very impressed with the community. You have an ideal location near my place of work and outstanding amenities [List any features you like such as: gym, pool, club house, playground, walking trails, ect.]. I understand that you run a credit check as part of the application process and I would like to provide some additional information on my credit history.

As you will see, I struggled with [late payments/debt] from [month] to [month] in [year]. I dealt with financial hardships during that time due to [explain your reason such as medical expenses, family crisis, job layoff]. I have since [explain how you have been resolving this issue such as finding a good paying job, budgeting, setting up monthly payments to pay off debt].

I am working extremely hard to repair my credit and set up a budgeting plan which will help me stay on top of these bills as well as my rent payments and expenses. I have included the last three months of bank statements showing my monthly income and expenses as well as my budgeting plan and professional references.

Despite my credit history, I believe I would make a great tenant and a great addition to your [rental complex name] community. If you have any other questions or concerns I would be happy to discuss them with you at any time. You can reach me at [phone number] or [email]. Thank you for your consideration.

Sincerely,

[Name]

Landlords: All You Need To Know About Rental Credit Check

Rental Credit Check for landlords

How To Run A Credit Check On A Rental Application

When you run a credit check on a potential tenant you must follow the guidelines by the Fair Credit Reporting Act and must get written permission from the tenant before you proceed. The tenant will then sign and date the documents you provided that state they agree to the credit check. Most landlords at a clause at the bottom of the application form asking for authorization to a credit check. If this isn’t provided in the application form then you will need to provide a separate document that can be signed by the tenant.

Sample Application Clause For Credit Check:

Applicant gives consent and authorizes the Landlord and all of Landlord’s representation to make any and all inquiries necessary to verify the information provided herein. This information includes, but is not limited to, direct contact with the Applicant’s current and previous landlords, employers, credit holders, credit references, financial institutions, neighbors, police departments…..’

Before you run a credit check you need to determine if you will charge an application fee to run a credit check as most programs cost money to do a credit check. Some landlords charge $15 for this or you can if you end up renting to application you can deduct the fee from their first month’s rent.

Smart Move by TransUnion is one program you can use to run a credit check. Smart Move allows you to create a free account and send the potential tenant an invite for a background check, then the tenant will receive a rental screening invite where they will complete the application. Once they finished Smart Move will send you the results with information such as a credit check, criminal, eviction and income insights and reports for you to make informed decision.

What To Look For In A Credit Check

When you get the results of the credit check you want to look for a few specific things that can help you decide if you want to rent to the tenant or not.

  • Late Payments – Do they have one late payment or is it a pattern of late payments? Multiple late payments might mean that they can not afford to pay rent.
  • Eviction History – Have they ever been evicted? If so what were the reason and the outcome? If it was something out of the tenant’s control or an issue with the previous landlord it may not hurt them but if they have a history of being evicted more than once or for a reason that you don’t feel comfortable renting to them then move on.
  • Debt – how much debt do they have? Do they have a lot of credit card debt? Large student loans or auto loans? Having a lot of debt could be trouble if they can’t make a payment but that doesn’t mean they don’t have the situation under control and on a budget plan.
  • Criminal History– Do they have any felonies? Are they under house arrest? Do they need to be away from children? These are all important factors to consider when renting out your place.

How Much Does It Cost To Do A Credit Check?

The cost to do a credit check ranges from free to around $30 depending on what features you are looking for. There are three great options to run a credit check that we have found to be most useful for landlords.

Experian

  • Free for landlords
  • Credit request is sent to the applicant using their name and email and they pay $14.95 for the report.
  • In the report, you get their credit score, names, addresses, employment, payment history, loans, evictions, bankruptcies, and credit inquiries in the past 24 months.

TransUnion

  • Free to sign-up and pay as you go rental screening of $30
  • Includes their full credit report, credit recommendation, eviction report, income insights, and criminal background check

Equifax

  • $15.95 for a comprehensive credit report or $29.95 for a full criminal background check.
  • Landlords must go through the National Association of Independent Landlords to get an Equifax credit report.

What Is The Minimum Credit Score A Landlord Should Accept?

The minimum credit score you should accept as a landlord is 600 to 650. This is around the same minimum credit score lenders use when approving applicants for home loans. This credit score shows that they still need some work on their credit but are trying.

If an applicant has a credit score below 600 it is up to you if you want to approve them or not. As a landlord, you can ask them about their financial history and why their credit score is low. If they have a good reason or include professional references and think you can trust them to make payments you can rent to them. You can also help them increase their credit score by using apps or programs that report their rental payments to credit bureaus such as RentReporters or Cozy.

Do you have bad credit, no credit, or want to learn how to become a credit expert?

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