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Most people today understand that their FICO credit score affects not only the interest rates they pay on credit cards—and what credit cards they can get—but also a number of other purchases and decisions, especially when moving!
Of course, your credit score has a big impact on the mortgage rate you’ll pay when you move into a new home. But one thing many people don’t think about, at least until they start apartment hunting, is how your credit score affects the apartment you can get.
If you have bad credit or no credit, as reflected in your credit score and in your credit reports from the three major credit bureaus (Experian, TransUnion and EquiFax), a landlord might:
- Request a larger security deposit
- Request two or three months’ rent upfront instead of just one
- Require a co-signer
- Refuse to rent you an apartment
- Suggest an apartment that costs less and is smaller and not as nice
Yes, a low credit score really can keep you from moving into your dream apartment. But all is not lost. There are several ways you can show yourself as a good credit risk even if your FICO credit score is less than 720—even if it’s in the 500s!
The First Step to Getting Your Credit in Order Before You Move
You won’t know what you need to do to secure your dream apartment until you get your credit score. There are hundreds of credit scores issued in the U.S., but the one most lenders, employers and landlords check is your FICO score. You can get this score from MyFico.com for a small fee.
It’s also a good idea to check your credit reports for inaccuracies a few months before you move.
You’re entitled to a free credit report from each of the three major U.S. credit reporting agencies once a year. If you spot errors, file a dispute with the credit bureau and then request a second (free) copy of your report so you can make sure the error has been fixed.
You don’t have to wait for the error to be fixed before you start apartment hunting. Make a copy of your dispute letter—along with any correspondence you’ve received in regard to the credit agency fixing the error—and include it with your apartment application.
Renting an Apartment with a Low Credit Score
You can use any of the tactics listed above to get an apartment even if you have a low credit score. There are also other steps you can take to secure a nice apartment with a low credit score.
1. Have your creditors write letters explaining your efforts to re-pay your debt and any extenuating circumstances. (Perhaps you lost your job and accumulated a lot of debt, but now that you’re working again, you’re re-paying that debt.)
2. Write a letter yourself explaining why and how you will be able to make your rent payments each month, even if you’ve fallen behind on credit card payments or other unsecured debt.
3. If your home has been foreclosed on, explain the reasons for the foreclosure and the steps you are taking to get back on your financial feet. Perhaps you had a history of making your mortgage payments before the introductory period expired on your Adjustable Rate Mortgage, which then made it impossible for you to meet your obligations or re-finance in today’s economy. You can explain this in a letter or during the interview process—it’s best to share this information upfront in a letter.
4. Get letters from previous landlords stating that you consistently made on-time payments in the past. Not all landlords report on-time payments to the credit reporting agencies, so this information may not be reflected in your credit report, but showing you were able to make rent payments on time in the past provides a good indication you’ll be able to do so in the future.
5. Get character references from your boss, co-workers or other people you’ve done business with. When you have a low credit score and are trying to prove to a landlord that you are a safe credit risk, every piece of information you can gather will help make your case.
6. Take heart. Not every landlord checks your credit score or pulls your credit file before renting an apartment. If you can show that you have the income to pay your rent every day, it might take a bit more hunting before you’re able to move, but it’s possible to move into a very nice apartment even if you don’t have great credit.
This post was contributed by MyMove.com, your online resource for moving advice, moving coupons and news and events in your new neighborhood.