Rental properties are an extremely popular housing solution for many people. Around 35% of households don’t own a home, and instead choose to rent from landlords. If you’re one of the many people that choose to rent instead of own a home, it’s important to save money, get your finances in order, and improve your credit score. Below are some of the many reasons your credit score will impact your rental application, and what you can do to fix them.
Bad Credit Might Indicate You Can’t Pay Bills
Around 35% of your credit score depends on how promptly and reliably you pay your bills. Prospective landlords will want to see that you will be able to make rent on time every month. If your credit score is low because of late or unpaid bills, it might send a red flag that you won’t be able to afford your monthly rent or don’t have the ability to spend your money appropriately.
There are a few things you can do to improve this part of your credit score. Start by ensuring all your bills are paid on time every month. You might also want to set up automatic payments so you never have to worry about forgetting a bill again. If you have any outstanding debt, make sure to pay it off as soon as possible. The sooner you can show landlords that you’re responsible with your money, the better chance you have of getting an apartment rented in your name.
Bad Credit Might Mean Higher Interest Rates
If your credit score is low and you’re approved for a rental, you might be asked to shell out more money each month. Landlords could require a higher deposit or ask for last month’s rent upfront. In some cases, they might even ask for a co-signer on the lease to help mitigate any risk they perceive in renting to you.
A good credit score can save you a lot of money in the long run, so it’s important to take the time to improve your credit before applying for an apartment. You can improve your credit score by reducing your debt. If you have any outstanding debt, make sure to speak to a debt consolidation company about getting rid of your debt by allowing you to pay it off over time with a lower interest rate.
Bad Credit Might Keep You from Getting Approved
If your credit score is really low, some landlords might deny your application outright. In this case, you’ll need to take the time to improve your credit before applying for another apartment. Fortunately, for those with severe debt, filing for bankruptcy might be a good option. Under Chapter 7 bankruptcy, debts like credit card balances, medical bills, personal loans, and overpayments can be discharged, giving you greater freedom as you move forward. While it will stay on your credit report for 7-10 years, it can give you a chance to rebuild your credit and improve your financial standing.
Bad Credit Can Make You Suspicious to Landlords
When landlords are looking at rental applications, they’re not just looking at your credit score. They’re also looking at your rental history, employment history, and criminal background. If you don’t have a strong rental history or if you’ve been fired from jobs in the past, that can alarm prospective landlords. In some cases, a shady past combined with a low credit score can be enough to keep you from getting approved for an apartment.
If you’re looking to improve your chances of getting approved for an apartment, start by working on your rental history. If you don’t have much of a rental history, get a roommate or try to sublet an apartment for a few months. This will show landlords that you’re responsible with money and capable of paying rent on time. If you have any arrests or convictions on your record, make sure to disclose them upfront so there are no surprises later on.
No matter what your financial situation is, it’s important to remember that your credit score matters. If you’re looking to rent an apartment, make sure to take the time to improve your credit score