You might think credit scores only play a role in whether you can be approved for an installment loan or a home mortgage loan, but you may not realize that landlords often consider your score when it comes to approving you as a tenant. Even though the consideration of your score does not play as heavy a role for a tenant as it does for securing a large loan, it is still important to be aware that your credit score plays a substantial part in many facets of your life.
According to The Wall Street Journal, renters make up the majority of big-city dwellers in America. This is largely due to the millennial generation putting off purchasing a home. This creates more significant demands for rental units, which in turn has caused landlords to not only raise their rent, but also to be more selective about the tenants they are choosing.
If you are a renter, thinking about applying and are concerned about your credit score, keep the following in mind:
“Landlords consider your credit score when you fill out a rental application.”
Start taking action
Before you begin your new apartment hunt, consider any outstanding debt you have. Preference should be given to items like unpaid credit card balances. Paying your bills on time can help you boost your score. This is important because landlords want to know that you have a track record of paying your bills on time. As noted by Experian, past financial behaviors are a good indicator of whether you will be able to pay your monthly rent on time.
According to Bungalow, just a month or two of on-time payments will not change your score drastically. However, consistent bill repayments will, and it could take at least six months to see any progress. Many landlords don’t require a perfect credit score, but they do make sure you maintain stable finances. While a bad credit score may not disqualify you right off the bat, it certainly won’t keep your application at the top of the pile. And in a time when demand continues to rise for rentals, the bottom of the application pile is not where you want to be.
Therefore, check your credit score and find out what you need to do to improve it before you begin filling out rental applications.
Use renting as an opportunity
It’s likely that one day you will decide to purchase a piece of property, whether it’s a single-family house, condo or some other type of home. This purchase will require a mortgage loan, in which your credit score will absolutely be considered to a much more rigid degree.
While renting an apartment, take the opportunity to build your credit score. You are making monthly payments to your landlord, which should help you develop good habits about paying down what you owe. Have a budget in place so that you can keep your bills paid off as well. Additionally, you should know that most apartments require a deposit upfront. If you cannot afford this, whether because of moving costs or some other instance, then you can consider a payday cash loan. This will help you secure your place, but you should already have a plan in place to pay it back.
Repaying your payday loan and keeping up with your monthly rental payments will help to boost your credit score. By the time you are ready to take out a loan for a home, your apartment renting experience should have gotten you to a good financial place with a solid credit score.
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