Apartment complexes check the credit of anyone trying to rent a living space. This is especially big apartment complexes who want consistency in monthly rent remittance. Some independent ones do rental credit checks too. It is a good way to avoid potential drama with people who have a difficult time making rent. Hence, the credit bureau apartments use to assess your credit behavior.
We have all heard about the horror stories of renting apartments to the wrong people, haven’t we?
Well, credit check for a rental property helps minimize that. This is often done by requesting your credit history and credit score from the three biggest credit bureaus in the United States. These are namely Equifax, TransUnion and Experian. Each compiles a credit report on you, which can be accessed by authorized people.
I elaborated more on these three credit bureaus on What You Need To Know About Credit and Credit Score. Read the article, because I laid it down in a way you can understand the impact of each on you as a working class American.
Which Credit Report Do Apartments Check?
Apartments look at TransUnion or Equifax for rental background checks. Others just hire a third party to get your credit report from the three major credit bureau. So, which credit bureau is most used for apartment?
Experian is the most commonly used. This is because the information it presents is simple and straight to the point. It can highlight what makes you a risk to rent to.
The credit bureau apartments use depends on the size of rental property. Some apartment rentals would rather have third party rental services like Zillow do it for them. This is especially, when their apartments are listed on Zillow.
What Credit Bureau Does Zillow Use?
Zillow uses Experian for its credit report. Whenever you apply for an apartment on Zillow, the landlord relies on Zillow to show whether you are a risk or not. The cost of it is included with your rental application, so there is no need to worry about paying a fee.
Does it make sense, my dear reader?
Apartments using rental websites to lease their housing units rely on them to do their own credit check on you. Some will charge for it. Others will just include it with your application fee.
What Do Rental Companies Look For In A Credit Check?
Rental companies look for evidence of missed and default payments during a credit check. I refer to a history of missed loans and default payments on debts. Rental credit checks include the following below:
- Payment history. This includes credit card debt repayment, car notes or other loans.
- Credit card utilization
- Loan defaults
- Any history of repossession
- Previous rent history that involves you owing rent. Yes- rental properties can report you to a credit bureau, when you owe rent for more than a few months.
Basically, you do not want to have these things on your credit history. I say fix your bad credit before applying for apartment. Whatever shows up on your credit history is used to determine your ability to make rent on time. You may be denied an apartment because of a bad credit score, but negative things on your credit history will definitely get you denied.
Think of it this way. If you have a history of renegading on debt payments, apartment complexes will see you as a tenant who will not make rent on time. As a result, they will not rent to you because you are not reliable. Apartments are businesses who rent to reliable tenants capable of emitting rent every month at an agreed time.
Does Rental Credit Check Affect Score?
A rental credit check is not a hard inquiry. There is a myth that a rental credit check affects credit score. Do not worry about it, because it will not affect your score. It is a soft inquiry, because it does not go into great details about your financial dealings.
The only thing capable of affecting your credit score, is whenever you renegade on a payment agreement with a rental or loaner. I discussed this on things you do which ruin your credit. Also, hard inquiries which I call a thorough check, may affect your credit score a little. This is used by banks or any service trying to loan you money or give you access to funds.
Anyway, you will be notified of any inquiry into your credit history. This is in accordance to the law. Also, you can see the inquiry on services you used to check your credit score. But, there will not be any credit score point deduction as a result of a credit inquiry by an apartment complex.
How Much Is A Credit Check For A Tenant?
A typical credit check for a tenant costs from $25 to $70, when a rental property wants you to pay for it. It is costly, is it not?
You are entitled to one free credit report per year. I talked about this on where to get your credit report for free. But, apartment complexes are not going to take any report you bring. This is because some people have been known to forge a report. This is why apartments do it themselves.
Most apartments will not charge you for a credit check, especially the big apartment businesses. All they need is for you to authorize a credit check to be run on you. However, some states may allow apartment leasing offices to charge you the cost of a rental credit check. There is a limit to how much these apartments can charge you for this check.
I advise you to check out your state’s law on the most you could be charged for a rental credit check. I know in Big Old Texas, there is no limit to how much we get charged. However, the charges must be only the cost of the screening process and nothing more. Simply put, apartments can only charge the actual cost of screening a tenant and no additional made up cost.
On the whole, what credit bureau apartments use is a matter of business preference. It does not matter which of the three credit bureau your report comes from, as along as you have a good credit standing. Just be sure to clean your credit history before applying for an apartment. I did a whole podcast episode on the credit score you need for an apartment if you want to check it out. It is worthwhile to listen to.
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