Surviving a Landlord Credit Check

By Rebecca Lake, Naomi Mannino and Jessica Sillers 

Opinions expressed here are author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

The Landlord Credit Check Survival Guide

You’re ready to rent your first apartment and take your adulting game to the next level. You’ve made plans to trade in your futon and milk-crate end tables for real furniture. Your parents are eagerly counting down the days until you move out.

You’ve already envisioned your first grown-up gathering in your new place. There’s just one wrinkle in the plan: your credit. But what’s that got to do with it, you’re thinking? The short answer is, a lot.

Introduction & Learning Points

According to Credit Sesame’s data, 70% of our members are renters. Eighty-six percent of members under 25 rent, as does 84% of the 25 to 34-year-old crowd. One thing they have in common? The struggle is real when it comes to their credit scores.

Over 50% of Credit Sesame members who rent have poor credit.

Sesame Data: Renters by State vs Credit Score Tier

The majority of people surveyed ended up being poor and good credit. Where Indiana had the most poor credit renters while California had the least poor credit and the highest amount of good credit renters. The bad news is that can keep you renting longer if you can’t qualify for a home loan.

The good news, however, is that you can still find a place to rent with a poor credit score — or a nonexistent one.

Main Learning Points: Starting Your Survival with 6 Key Lessons

The secret is knowing how to navigate the landlord credit check.

Point #1: What’s a landlord credit check?

If you’re filling out a rental application, there’s a good chance the landlord will mention a credit check at some point. This is something you have to agree to; a landlord can’t check your credit without your permission. Often landlords will include wording in the fine print of the application letting you know that a credit check is involved.

Signing the application gives the landlord the green light to pull your credit. If you want to rent a place and the landlord’s requesting a credit check, you can refuse. But, they might not process your application without it.

Before you sign off on a credit check, ask the landlord if they’re going to do a hard or soft pull. A soft pull of your credit won’t hurt your credit score. A hard inquiry, on the other hand, will show up on your credit report and ding your score by a few points.

Point #2: Can a landlord check my credit?

Legally, a prospective landlord can ask to check your credit. But that’s the key word, ask. They can’t run your credit without your written permission. There has to be a clause included in the rental application asking for consent to check your credit or the landlord has to give you a separate permission form to sign.

If they run your credit without either of these things, they could land in legal hot water.

Point #3: What is a landlord credit check?

Landlords have several options for checking your credit. For example, they could pull your report directly from one of the major credit bureaus. Equifax, Experian and TransUnion all offer credit check services for landlords. A landlord can also run a credit check through a landlord association, like the National Association of Independent Landlords.

A third option is to use a tenant screening service to check your credit. These services can offer comprehensive reports that include a credit check and a background check. Landlord credit checks are usually different from the standard credit check you might run into if you’re applying for a credit card or a loan.

With those kinds of credit checks, the creditor’s trying to figure out how likely you are to repay what you borrow. With a landlord credit check, the landlord’s trying to get a feel for how likely you are to pay the rent on time, stick around in the rental for the long term and take care of the property.

Point #4: What’s in credit reports for landlords?

As far as what’s actually in the credit report your landlord sees, it really depends on where they’re pulling it from.

But generally, your report will include personal information like:

  • Your name
  • Social Security number
  • Birth date
  • Address history
  • Phone number
  • Employment history

It’ll also show financial information that covers your credit accounts. That includes:

  • The name, address and account number for each of your creditors
  • Your current balance and credit limit
  • Your payment history
  • Collection accounts and public records, like bankruptcies or judgments
  • Inquiries for new credit
  • Age of your credit accounts

If the credit screening also features a background check, the report might include other details. For example, if you’ve ever had a criminal conviction or been evicted, that could show up on the report. Landlords can also screen tenants to see if they’ve ever been registered as a sex offender or flagged for terrorist activity.

Point #5: Who pays for a landlord credit check and how do apartments check your credit history?

The landlord can pay for the credit check but what usually happens is you pay for it yourself. The credit check fee can be included in the application fee or be separate. The cost depends on how the landlord’s checking your credit.

A company like TransUnion SmartMove charges $25 to $35 for tenant credit checks, depending on how in-depth the landlord wants to go. MyRental.com offers tenant screening reports ranging from $14.99 to $34.99. The more detailed the landlord likes the report to be, the more you’ll likely pay for it.

Point#6: Why do landlords check your credit?

Owning a rental property is an investment to a landlord. Just like any other investment, they want to do everything possible to make sure they don’t lose money. That’s what the credit check is for.

If your credit report shows that you’ve been evicted, for example, that’s a big red flag to the landlord that you might not always pay your rent on time. Landlords don’t want to see that you’ve moved around a lot; they want to know that you’re going to stay put so they can bank on drawing rental income from the property each month.

Having a car repo’d, unpaid debts that are charged off, multiple collection accounts or outstanding court judgments are also going to catch a landlord’s eye. All of these things scream high-risk and not every landlord may be willing to take a gamble on that kind of tenant.

Even if your credit report doesn’t have these kinds of black marks, a landlord’s still going to look at how financially responsible you are in general. A consistent payment history shows that you know how to keep up with your bills. Low balances on your credit cards are a sign that you can keep your spending in check.

The more financially responsible you look, the better in a landlord’s eyes.

The Key Points: Taking Action on Checking & Building Credit with Rent

Surviving a landlord credit check might make you a little nervous but it’s not impossible.

We gathered first-hand accounts from some of our Credit Sesame members who found themselves trying to land a rental with less than stellar credit.

Sesame Stories™: Sesame Members Renting Their First Home

Brielle P.
Member since: 2016

  1. When did you apply to rent your first home?
    1. In May 2016. After my freshman year ended I wanted to move out of the dorm into my own apartment.
  2. When did you find out you might be subject to a landlord credit check?
    1. I knew they would check my credit because I have several friends who have gotten their own places.
  3. Did you know what your credit score was prior to your first landlord credit check?
    1. No I didn’t.
  4. What happened as the result of your first landlord credit check?
    1. They said I did not have a credit file.
  5. Did you take steps to improve your credit as the result of a landlord credit check? If so, what were they?
    1. I wanted to have a credit file so my mom added me as an authorized user to her credit card. Her credit score is about 700. I ended up getting a credit file and I think my score started out at about 605. That is when I joined Credit Sesame and found out about secured cards. I got one with a $200 deposit and now my score is 658.
  6. What do you recommend to others who want to apply for their first rental home?
    1. You need to find out about credit scores. I got the apartment but my mom had to cosign which I was not comfortable with. I would feel better if my finances were totally independent from my mom.

Jorge R.
Member since: 2017

  1. When did you apply to rent your first home?
    1. 2007
  2. When did you find out you might be subject to a landlord credit check?
    1. When I started applying.
  3. Did you know what your credit score was prior to your first landlord credit check?
    1. Had no idea.
  4. What happened as the result of your first landlord credit check?
    1. I had a collection account from an old cell phone bill that I didn’t pay and then forgot all about. None of the corporate landlords would rent to me. I ended up renting an apartment from a couple, and it was pretty hard to find a landlord that was willing to overlook my bad credit. I didn’t have any evictions so that helped.
  5. Did you take steps to improve your credit as the result of a landlord credit check? If so, what were they?
    1. Eventually the collection fell off my credit report so I didn’t have to worry about that. Three years after finding an apartment I bought a used motorcycle from the local dealership. Paying that loan every month made my credit score go up a lot. I have two credit cards now because I prefer not to carry cash, and I use Credit Sesame to check my score which is about 690. I am watching my grades. My average account age is three years and I am not opening any new accounts until the average is at least five years. I have a balance that I am paying off and it’s going slow but it’s coming down.
  6. What do you recommend to others who want to apply for their first rental home?
    1. For one thing, check your credit. If you have collections you might have to pay them or be prepared to wait a long time for them to stop showing up. You are going to have a much easier time finding a place to live if you can pass the credit check. Get a loan or a credit card so you can start bringing the score up.

How to Check Your Own Credit

Before you start scoping out rentals, it’s a good idea to check your credit before a landlord does. Checking your credit lets you see what could be helping you, or what might hurt you when you fill out the rental application. There are a few different ways to check your credit report.

The easiest is to become a Credit Sesame member if you’re not already.

Credit Sesame Membership

It’s free to sign up and when you join, you’ll get access to a credit dashboard that includes your TransUnion credit report and your VantageScore 3.0 credit score.
This dashboard breaks down all the most important things you need to know about your credit report:

  • How much debt you have, how much of your available credit you’re using
  • How often you pay your bills on time
  • Average age of your credit accounts and how often you’ve applied for new credit

You can also get recommendations for loans, credit cards and bank accounts, as well as tips for improving your score.

Annual Credit Report (Government)

If you want to see what’s on your credit reports from Equifax or Experian, you can head to AnnualCreditReport.com to get a free copy of your credit report. (You can also get your TransUnion report here too.) If it’s your first time checking your credit ever, you might want to pull all three reports at once.

That way, you can compare your reports to see if your information matches up. Remember, though, that with AnnualCreditReport.com you can only get one free copy of your report from each bureau each year. If you want monthly credit monitoring, sign up for a Credit Sesame membership.

How to Rent an Apartment with Bad Credit

If you’ve got bad credit or no credit, renting is all about having a game plan. Here’s what you need to do.

  1.  Find out what’s in your credit report – If you haven’t done this already, check your credit pronto. Look for things like late payments or collections that could be dragging your credit score down.
  2. Talk to the landlord – There are two different conversations you might have if you’re trying to rent with bad credit. First, you can give the landlord a heads-up before you apply that your credit isn’t the greatest. Then, do your best to explain why your score is low and what you’re doing now to try and bring it up. If you’ve already applied for a rental and been denied, you can have a second conversation about what lead to the denial. If your credit is the issue, this is another chance to make a strong case for why the landlord should reconsider.
  3. Pick a landlord that doesn’t do credit checks – If you’re really worried about your credit being a problem, you can always look for a rental that doesn’t require a credit check. A landlord who only owns one or two properties, for instance, might be willing to overlook your credit if you’ve got a strong employment history and some money tucked away in savings. Both can reinforce the idea that you’ll be able to pay the rent each month.
  4. Consider renting a room instead – If you can get by with less space, you may try to rent a room versus an entire house or apartment. Renting a room can mean sacrificing a certain amount of privacy but you might not have to pass the landlord’s credit test to find a place.
  5. Get a cosigner – Let’s face it, asking a parent, family member or friend to cosign on a rental can be awkward to say the least. But if your credit stinks, it might be your best option. Remember that if someone cosigns your lease with you, they’re on the hook financially just the same as you. If you don’t pay the rent and end up getting evicted, that can wreck your credit and theirs.

One last thing to think about is offering the landlord a bigger deposit. Most states limit how much of a deposit the landlord can ask for. But, if you’re willing to pony up more cash upfront, they may be open to letting you rent, even with bad credit. You’ll need to show a bank statement or other proof that you have the money set aside.

You can also shore up your request by showing proof of employment and proof of on-time payments for any bills you have in your name that may not show up on your credit report. Think your cell phone bill or your car insurance.

How to Use Rent to Build Credit

If you’ve managed to successfully get a rental lease, you could use your rental history to give your credit a boost. Rent reporting services let you list your rental payment history on your credit report. If you pay on every month, that could help strengthen your credit profile.

Sesame Data: Renters vs Homeowners Credit Score Improvement

We found that even though homeowners on average have higher credit scores, when we compared two groups actively trying to improve their credit score both homeowners and renters climbed at a similar pace.

How Rent Reporting Works

Rent reporting services in general report your rent payments to the credit bureaus. These companies collect your rent and payment information from your landlord. They then share it with the credit bureaus they partner with. Some only report to one bureau; others report to all three.

Typically, you can get up to two years of rental payment history reported on your credit. Your rent payments can be factored into your credit score. Keep in mind, however, that rental history isn’t included in all credit scores. It might be used for your VantageScore but not your FICO score, for example.

That’s important because FICO scores are the most widely used by lenders.

Rent Reporting is Paid…Sometimes

You shouldn’t expect rent reporting to be free either. Most companies that offer rent reporting charge a one-time or monthly fee for their services.

Conclusion & Summary: Building Your Credit Score with Rent – The Main Steps

5 Steps to Rent Your First Apartment

To wrap things up and recap, here are the most important steps for renting your first apartment:

Step #1: Check your credit reports and score first

Get your hands on your credit report, either from Credit Sesame or AnnualCreditReport.com. Get familiar with what’s in your report and look for any errors or inaccuracies. If you spot something that doesn’t look right, dispute it with the bureau that’s reporting the information.

All three credit bureaus let you initiate disputes online. If you can prove there’s an error, it has to be corrected or remove.

Step #2: Figure out your rental budget

If you’ve never rented a place before you might be totally clueless about how much rent costs in your area or what you can afford. Sit down and add up all of your expenses for the month and compare that to your income. Then, look around at what homes or apartments are renting for in your area.

How much can you afford to pay for rent and still be able to cover all your other bills? If rent would put you in the red, you might need to rethink your spending, look for a roommate or settle for renting a room instead.

Also, don’t forget to create a separate budget for moving costs and outfitting your new place.

Step #3: Save up your deposit

Landlords often expect you to pay a security deposit before you can move in. This deposit could be a set dollar amount or the first and last month’s rent. Either way, you need to have this money on hand sooner rather than later.

If you’re starting from zero in the savings department, go back to your budget and see where you have some extra dollars you can stash away. Keep in mind that you might also need separate deposits for electric, water, cable TV or internet service at your new place.

Step #4: Document your income

Your landlord’s going to ask you to show them the money, which means you’ll need pay stubs to prove your income. If you get direct deposit, take along a couple months’ worth of bank statements to show how much is being deposited into your account.

Step #5: Read the lease before you sign

Before you sign a lease, read it carefully so you know what you’re agreeing to. Breaking any of the rules could result in the landlord charging you a fee or even asking you to leave. You may also want to review the landlord-tenant laws in your state before you sign. These laws exist to protect you against unfair practices but you can’t exercise your rights if you don’t know what they are.

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Published July 10, 2016 Updated: January 9, 2018
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Mike•  May 7, 2017
I used rentreporters recently and the great thing about them is that unlike renttrack they can also report the last 24 months of your rental payment history which holds far more weight than 1 month of rental payment history. They have a deal right now for this, its $39.95 when you use coupon code $39.95. My score went up 65 points from reporting my rent and I just recently requested credit limit increases with my credit cards and my score is now up 115 points since I joined. Thanks for sharing this information!
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