Having a credit score that isn’t within the excellent range (above 720, depending on the scoring model) may be an issue, especially if you’re looking to rent in a big city. Competition for apartments in desirable markets is fierce and you’ll likely be passed up if your credit score is low, as landlords usually require a good credit score from tenants.
It won’t matter that you have a stable income and filled out the application first. There will be other potential tenants who are also gainfully employed but also have a better credit score than you, which will give them an edge when the landlord is looking over applications.
The following factors are considered when calculating your FICO credit score:
- How long you’ve had credit (payment history)
- Credit utilization (how much credit you’ve used vs. your overall credit limits)
- How much new credit you have
- What types of credit you have
You should really only focus on the first two factors when improving your score. However, it’s best not to open any new credit cards during this time (referring to number three), as hard credit inquiries can ding (and lower) your score.
Here are the five ways to improve your credit score.
1. Pay your bills on time
According to FICO credit score calculations, paying your bills on time (payment history) accounts for 35 percent of your score. This means you should never ever make a late payment — ever.
2. Pay off your debt
Your credit utilization is the amount of debt you have in relation to your credit limits. In order to get this percentage, you divide your total amount of debt to the total amount of credit.
For example, if you have $2,000 worth of credit card debt and a $10,000 credit limit, your credit utilization is 20 percent. Experts recommend you keep this in the one to 10 percent range.
If you can’t afford to pay off your debt completely, start paying more than the minimum balance. Paying off your debt improves your credit utilization.
3. Become an authorized user on someone else’s credit card
Ask your family member or close friend for help and ask to be added as an authorized user on their credit card. Getting added as an authorized user to their account (as long as they have good credit) is an easy way to ride their “good credit coattails.”
Make sure you do this with someone who’s responsible with their credit, since their credit will ultimately affect yours. This is why it’s especially important that both parties trust each other and understand how to responsibly use credit.
4. Open a secured card
If you’re dealing with a really low score (below 600), consider opening a secured card. This can help you build credit, as long as you make on-time payments.
Make sure that the secured card issuer reports to all three credit bureaus (TransUnions, Experian and Equifax). Also, keep in mind that a secured card takes cash collateral from you, meaning you have to front the cash as your credit line.
5. Include rental payments in your credit score
If you’re not in a rush to move, ask your current landlord if he or she would report your on-time rent payments to the credit agencies. There are a number of ways to do this, including through your landlord (most ideal) and by paying to use a rent reporting service.
Improving your credit takes time
Whatever moves you decide to make first, be sure to stay consistent and monitor your credit at least once a month. Most likely, your bank or credit card offers this to you for free. Or you can use a free credit monitoring service like Credit Sesame or Credit Karma.
Regardless of whether you’re in a competitive market, raising your credit score can give you an edge when renting an apartment. At the very least, it’ll put you on par with other renters so you can stay in the running for that perfect apartment you’ve been dreaming about.
Claire Tak is a writer who previously served as head of content and chief editor for FinTech companies in New York and San Francisco. Her work has appeared on FOX Business, Bloomberg and Forbes. She writes regularly about travel, money and being a good human. Traveling and snowboarding are her two favorite things to do.
FAQs
It is possible to improve your credit score in just 30 days. Make sure you never make a late payment on debt or utilities, try to increase your credit limits if possible, get a credit card, pay off debt, and reduce your credit utilization. These are a few ways you can turn things around quickly.
How can I build my credit while renting? ›
If you pay your rent on time every month, reporting your rent to credit bureaus can be a safe way to add positive payment behavior to your credit report.
What should your credit score be before renting an apartment? ›
Landlords generally prefer a minimum credit score of at least “good,” which is 670 to 739. A score at or above that range will make apartment applications easier. Still, even a “fair” (580 to 669) or “poor” (300 to 579) score won't necessarily put the kibosh on your rental hopes.
How would your credit history affect your chances for renting your first apartment? ›
Key takeaways
- There's no official or legal minimum credit score needed to rent an apartment. ...
- Landlords may typically look for tenants with at least a fair or good credit score.
- Landlords may also use tenant screening reports, with information like rental history and employment verification, to make rental decisions.
Whatever your reason for wondering how long it takes to get a credit score, you can generally expect it to take about six months – and usually longer to get into the good-to-exceptional credit score range.
How do you increase your resident score? ›
The best way to raise your score is to request a credit report from one of the three major credit bureaus (TransUnion, Equifax, and Experian) and do a deep dive. Clean up any outstanding accounts so that your record is positive. Remember, you get one free credit report per year by law!
How do landlords get your credit score? ›
Some tenant screening services offer credit reports to landlords. On e-renter.com, for example, landlords request certain credit requirements, and the site tells them whether the tenant meets them. Reports may also include evictions, bankruptcies, collections and other background information.
How can poor credit affect renting? ›
If you have bad credit, this could result in a rejection for the apartment or a more expensive security deposit. However, that's not always the case. Some landlords don't check credit at all, while others are willing to overlook iffy credit if you can prove your responsibility and trustworthiness in other ways.
Does paying bills build credit? ›
Paying utilities, rent and cell phone bills can help build credit if they're reported to the credit bureaus. If certain bills aren't reported to the credit bureaus, you can consider using a third-party service to report your payments.
Can you get an apartment with a credit score of 500? ›
Yes, renting an apartment with a 500 or below credit score is possible. However, you might not get the apartment of your dreams until that score improves. Fortunately, you can still get a decent apartment if you provide strong proof of income, get a co-signer, or rent on a month-to-month basis.
How to Build Good Credit
- Review your credit reports.
- Get a handle on bill payments.
- Use 30% or less of your available credit.
- Limit requests for new credit.
- Pad out a thin credit file.
- Keep your old accounts open and deal with delinquencies.
- Consider consolidating your debt.
- Track your progress with credit monitoring.
Credit score requirements for apartments vary by landlord, but most require at least a 670. Landlords can also view your credit report for any delinquencies or accounts in collections. If you have a low credit score, landlords may ask for upfront payments, guarantors, or references.
Can paying rent increase credit score? ›
Does paying rent build credit? Simply paying your rent will not help you build credit. But reporting your rent payments can help you build credit — especially if you are new to credit or do not have a lot of experience using it.
Does getting denied for an apartment hurt your credit? ›
No, denied credit applications won't appear on your credit report. Lenders don't report whether your applications were approved or denied because even approved applications don't necessarily result in a new account.
Can I rent an apartment if I have credit card debt? ›
Yes, it is possible to rent an apartment with bad credit, and there are ways to boost your appeal as a renter to prospective landlords. A lot of the information they gather will come from your credit report so you need to give them some positive signs that you are making an effort to deal with having bad credit.
How do you add your rent to your credit score? ›
There are two ways that your rent can be reported through a rent reporting service: your property manager can report payments for you, or you can report payments yourself.
How to build credit fast when you have none? ›
7 Ways to Build Credit if You Have No Credit History
- Become an authorized user.
- Try a credit-building debit card.
- Apply for a secured credit card.
- Apply for a credit-builder loan.
- Apply for a store credit card.
- Have rental payments reported.
- Establish credit with Experian Go™
On your account homepage, scroll down to the "Explore other actions" box and click the button marked "Add bills to Experian Boost." On the Experian Boost landing page, enter information on the checking or credit card account(s) you use to pay the bills you want added to your credit report.
Does Flex Pay help credit score? ›
Q: How can using Flex build my credit history? A: When you use the Flex Credit Line and make on-time payments, we may report a history of positive payments to TransUnion. If you do not make on-time payments, it may negatively affect your credit.
