Whether you’re applying for one of the best credit cards or you’re looking for a new apartment or home to rent, credit checks are bound to happen.
Landlords and property owners want to vet the people they’re renting property to so their assets and finances are protected. You may be wondering how a landlord credit check works and what type of information landlords see when they’re looking at a renter’s credit history. Prepare by knowing the details of a credit check by landlords.
What do landlords look for in a credit check?
Landlords use a credit check for tenants to make sure the person they’re considering renting to has a solid financial history and is considered trustworthy. In a credit check, a landlord is looking for a good credit history and on-time payments. They’re also looking to see if a potential tenant has been previously evicted or has declared bankruptcy, which may influence their decision to rent.
What can a landlord see in a rental credit check?
The information depends on the type of rental credit check that is accessed, but the following may be shown in a tenant credit check.
- Credit inquiries and history
- Mortgage payment histories
- Public record filings, like bankruptcies, tax liens and eviction reports
- Income information
- Social Security number
- Current and previous employers and addresses
Is a rental credit check a hard or soft inquiry?
In many cases, a rental credit check is a hard inquiry. Hard credit inquiries require your permission. They can also lower your credit score by several points because they’re calculated as part of the “new credit” part of your credit score, but it’s easy to bring this part of your score back up as time passes.
Some landlords may do soft inquiries into your credit, which will not affect your score. These can be done with third-party services or by asking you to provide your credit report by accessing a free service.
Can I rent if I have bad credit or no credit history?
There may be landlords who don’t do credit checks. While large property management companies typically require a credit check, renting from a landlord with a smaller portfolio could be an option.
Some landlords will rent to those with poor credit but will require an increased upfront payment, like a bigger security deposit.
There may also be bad-credit apartments and apartments specifically available to those with low income. Apartments based on income are targeted to those who need affordable housing but who may not meet the credit and income requirements of other landlords.
You may also look into co-signer options. That can give a landlord confidence in renting to you since the co-signer will have to meet the landlord’s credit requirements and will be on the hook for payments and rental terms.
What credit score is needed to rent an apartment?
You may be wondering what kind of credit score you need to rent an apartment. For instance, can you get an apartment with a 500 credit score?
Each landlord will have different requirements, so it helps to know what’s considered a “fair,” “poor” or “very poor” credit score. The fair FICO score is 580 to 669, while the fair VantageScore is 601 to 660. Anything below those is considered poor or very poor.
If your score is poor or very poor, you may encounter rental challenges. You may want to get prepared with other options, like using a co-signer or looking for based-on-income apartments.
How to pass a rental credit check
To pass a rental credit check, you’ll want your credit score to be as high as it can be. Improve your score by making on-time credit card payments, lowering your credit utilization and not opening or closing accounts to maintain your credit history and lower your credit inquiries.
Credit scores and the pandemic
According to recent data from FICO, the average U.S. credit score continues to sit above 700, indicating that the widespread economic uncertainty following the coronavirus pandemic has not yet caused widespread decline in creditworthiness. But since credit scores track past credit use, it generally takes some time for events like this to show up on credit reports.
If you’re struggling to pay bills, contact your creditors and lenders and explain your situation before your credit score takes a hit. Many auto lenders and credit card companies have hardship programs in place for customers impacted by the coronavirus. These programs can lower your monthly payments or potentially suspend payments temporarily. While you’ll still need to pay back your debt, this will protect your credit, assuming you follow the terms and conditions set by your lender.
What to do if you have a low credit score
If you have a low credit score, present the landlord with information showing you’re a trustworthy tenant. This can include detailed employment history and proof of income, an offer to talk with your current landlord and references or statements of past on-time rental payments.
You can also ask to use a co-signer, which guarantees the landlord will be paid for rent if you’re unable to make payments. You may also offer advanced payments and a larger security deposit to show you’re serious.
What else do landlords look at?
Landlords might run a background check to look at criminal convictions and lawsuits. You’ll have to permit a landlord before the landlord runs a background check on you.
Some credit screening reports will include income information. When this isn’t available, a landlord may ask you for several months of recent pay stubs to make sure you have steady finances.
A landlord may ask for references, like people who have rented to you in the past, to explore your tenant candidacy.
3 credit habits that you need to break
Are you using your credit card responsibly? Or do you have a few bad habits? Take a look at three common bad habits that people have with their credit cards and the best ways to stop doing them.
Habit 1: Pushing the limits
The first bad credit habit is pushing your outstanding balance close to its limit. What’s wrong with that? The first problem is that you’re giving yourself a larger debt load to contend with every month — one that accumulates interest the longer that it sits. It could be very difficult to pay down, and it could even lead to you maxing out your card.
The second problem with this habit is that it leaves you vulnerable to emergencies. You’ve taken up the majority of your available credit, so you can’t depend on it for unexpected payments. What if you need to pay for an urgent repair and there’s not enough room on your card? What can you do?
To avoid that difficult situation, you could apply for an online loan to help you cover the emergency costs and move forward. See how you can apply for an online loan in Ohio when you have no other safety nets to fall back on. It’s important that you only turn to this solution when you’re dealing with an emergency. It’s not for everyday purchases or small budgeting mistakes.
In the meantime, you should try your best to keep your credit utilization at 30% or lower — this means that your balance should be below the halfway point of your limit.
Habit 2: Paying the minimum
You pay your credit card bills on time, but you only give the minimum payment. While this habit can stop you from racking up late fees and penalties, it can still get you into hot water if you’re not careful.
Only paying the minimum for your bill will make it very difficult for you to whittle down the balance, especially when you’re continuing to charge expenses on your card. You’re only taking $20-$25 off a growing pile.
So, what can you do? If you’re paying this amount by choice, stop it — you’re only making things harder for yourself down the line. If you’re paying this amount because you don’t have any more funds, look at your budget to see whether you can cut your monthly costs to get more savings and use them to tackle your balance.
Habit 3: Using it for every single expense
You don’t need to put every single expense on your credit card. Your morning coffee? Your afternoon snack? Putting these small, everyday expenses on your card is a habit that can make your balance climb quickly.
You also don’t want to put some very important expenses on there, like mortgage payments. For one, these payments are large and will take up a significant amount of your credit. Secondly, if you need to use a credit card to make these payments on time, you need to reinvestigate your budget to see whether you can actually afford your living space.
So, what you should you do? Use a debit card, cash or checks to pay for the items above. Only put expenses on your credit card that you’re positive you can pay off in a reasonable timeframe.
Don’t let these bad habits drag you down and get you into financial trouble. Break them now, before it’s too late.
Free credit reports have been extended; here’s why it’s important to check yours regularly
Typically, you’d be able to check your credit report — at least for free — just once annually through each of the three major credit reporting agencies. But thanks to the coronavirus pandemic, credit reports are now more accessible than ever.
Credit reporting companies Equifax, Experian and TransUnion are all offering free credit reports weekly through April 20, 2022.
The move means better insight into your financial health during what, for most, is an economically challenging time. According to experts, it might also be a time that’s ripe for at-risk personal information and identity theft, too — even more reason consumers should be checking their credit on the regular.
Have you checked your annual credit lately? If not, here’s what you need to know about these free nationwide credit reports and how to get them. If you’re not sure where you fit on the credit score spectrum, you may want to start using a credit monitoring service to track changes to your credit score. Credible can get you set up with a free service today.
Free credit reports for all?
The nation’s three credit bureaus initially started offering free weekly credit reporting last year, just after the pandemic began. In early March, they announced they’d extended the offer for another year, this time through April 20, 2022.
To request your free credit reports and access copies, you can go to AnnualCreditReport.com and provide some basic information to verify your identity (things like your date of birth, Social Security Number, and address).
Once your report is ready, you should see a detailed list of all open and closed accounts in your name, your payment history, recent credit activity and more.
Protect yourself from identity theft
There are many reasons why checking your credit activity is important, but chief among them? That’d be the prevalence of data breaches in today’s world — not to mention the risk of identity theft they come with.
“In the past, it was perfectly acceptable for people to check their credit history once a year, but now with security breaches happening on a regular basis, consumers should be monitoring their credit more closely than ever,” said Clint Lotz, president and founder of TrackStar.ai, a predictive credit technology firm.
Lotz said the Equifax breach — which exposed over 147 million Americans’ personal information in mid-July 2017 — is the perfect example of why watching your credit report is important as far as identity theft protection goes. The pandemic, he said, adds an extra layer of risk to things.
“It took them [Equifax] months before they even realized they had been hacked, and considering that they hold files on hundreds of millions of Americans, it’s fair to say that many identities were stolen by the time they caught up to it,” Lotz said. “With many of us worrying about very serious issues not related to our credit, it’s a prime time for that stolen data to be put to work by bad actors in slow, methodical ways and in the hopes that nobody notices it.”
More reasons to check your credit
Checking your credit health often isn’t just good for detecting fraud alerts and to protect your identity, though. You can also monitor your report for errors — things like inaccurately reported late payments, for example — and then dispute those with the credit bureau.
If the error gets corrected, it could improve your credit score and make a jump from bad credit to a FICO score that’s more favorable. Not sure of your credit score? Head to Credible to check your score without negatively impacting it.
You can also use your credit reports and scores to monitor your financial habits — like the timeliness of your payments or how much debt you have left to pay off. Both of these factors can play a big role in your score, as well as how likely you are to get approved for loans, credit cards and other items.
“If you’re taking out a loan, getting insurance or even applying for a new job, checking your credit will allow you to see an overview of what would be seen by others looking at your credit,” said Leslie Tayne, a debt relief attorney with the Tayne Law Group. “Staying up-to-date on your credit reports and information allows you to know exactly where you need to improve.”
Want to be sure your credit is stellar before applying for a loan or insurance policy? Consider Credible’s partner product Experian Boost, which lets you use positive payment history on utilities, streaming and other bills to improve your credit score.
Set up a monitoring service, too
Though checking your credit reports manually is smart, you should also consider signing up for a credit monitoring service. These consumer financial services check your credit information and score regularly and alert you of any changes.
If you’re interested in monitoring your credit or improving your score, head to Credible and learn more about how Experian can help. You can also use Experian Boost to get credit for on-time bill payments.
Have a finance-related question, but don’t know who to ask? Email The Credible Money Expert at [email protected] and your question might be answered by Credible in our Money Expert column.
Do Personal Loans Have Penalty APRs?
Select’s editorial team works independently to review financial products and write articles we think our readers will find useful. We may receive a commission when you click on links for products from our affiliate partners.
The Blue Cash Preferred® Card from American Express, for instance, has a 13.99% to 23.99% variable APR, but the penalty APR is a variable 29.99% (see rates and fees). Penalty APRs usually last for at least six months, but card issuers often reserve the right to extend them — especially when you continue making late payments. A look at the terms for the Citi® Double Cash Card show us that the “penalty APR may apply indefinitely.”
Penalty APRs are certainly not a trap you want to fall into, but it’s not something you usually have to worry about if you have a personal loan. Personal loan lenders can, however, charge late fees upwards of $39 per late payment. Whether your loan charges late fees all depends on how good of a loan you qualify for, and that comes down to your credit score, borrowing history and ability to make your payments.
Personal loans also tend to charge lower interest rates than credit cards, too. The average personal loan interest rate for two-year loans is currently 9.46% according to Q1 2021 data from the Federal Reserve, compared to 15.91% for credit cards.
Typically, interest rates for personal loans range between roughly 2.49% and 24%, but personal loans for applicants with bad credit can come with even higher APR — so do your research before applying.
Other common personal loan fees include:
- Interest: The monthly charge you pay to borrow money
- Origination fee: A one-time upfront charge that your lender subtracts from your loan to pay for administration and processing costs
- Late fee: A one-time fee charged for each payment that you fail to make by the due date or within your grace period
- Early payoff penalty: A fee incurred when you pay off your balance faster than planned (because the lender misses out on months of expected interest payments)
As you can see, personal loans can be costly, even without a penalty APR. It’s obviously best to avoid paying extra fees whenever possible. That’s easier to do when you have a good to excellent credit score, since you’ll qualify for better loan options.
None of the loans on our best personal loan list charge origination fees or early payoff penalties, but some may charge late fees.
Find the best personal loans
For rates and fees of the Blue Cash Preferred® Card from American Express, click here.
Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
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