CREDIT SCORE
What Constitutes a Good Business Credit Score?
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We’ve all been there, a late payment by credit card, a hard choice between making payments for student loans and purchasing concert tickets, or trying to make a payment for a new vehicle that exceeds your budget. And then, unexpectedly, your credit score gets a hit. A variety of variables influence our credit ratings, but we do not often see how our credit, in turn, affects us in our everyday lives. Having bad credit, among other items, makes renting an apartment challenging (but not impossible) to find. So, exactly how does your rental application impact your credit score and what should you do about it? We’ll clarify.
The Fundamentals
When submitting your apartment application, it’s normal for most landlords to request a background and credit check. The background check will explain any felony convictions or history of eviction in your past, while your credit check will reveal your score and a variety of factors that have led to it, including:
- Student loan payments
- Credit card payment history
- Number and type of credit cards
- Opened and closed lines of credit
- Loan applications and loans are taken out
- Bankruptcy, foreclosure, repossession
Most landlords and property managers usually like to see a score of 620 or higher, although it can vary. To see how the scores are scored, check the chart below:
Why it affects your application for apartments
If your credit score is below 620, it will signal that you are a risky renter to the landlord. Ultimately, landlords depend on your rent money as revenue, and they want a homeowner who will pay them every month in full and on time. So, if you have a poor credit score or a history of late payments, they will be less likely to choose you as their tenant.
You’re in competition with other tenants competing for the same apartment when you submit your application. For a moment, put yourself in the shoes of the landlord and think about which renter you will choose with the following example:
Jeff has a 550 credit score. His payments by credit card are consistently late and he recently purchased a new car for which he has to make monthly payments.
Joey has a 660 credit score. His payments on his credit card are usually on time and he makes payments on student loans that are usually on time.
Joey’s credit score and record are not flawless, and that’s all right. There will be times where you won’t be able to make every payment on time, and bills will pile up. No one is flawless, and landlords know that. In this case, though, if you were the landlord, it’s still easy to see which choice you might make. Jeff’s credit score will be rated as “Very Poor” and, coupled with his new car payments, his history of late payments makes him a riskier option than Joey.
It’s good, to be honest about your credit score before going on an apartment tour or meeting with a prospective landlord. Let the landlord know any variables that have led to your low ranking, adjustments you have made after finding your ranking and display pay stubs to demonstrate that you can make monthly rent payments. Be frank and take responsibility; it will demonstrate that you are aware of your limitations and are willing to make changes.
Add read: Increase Your Chances of Getting Your Personal Loan Approved
In the rental application process, your credit score itself is very significant. It could be the one differentiating factor between you and another potential renter. If you’re trying to land your dream apartment, keeping up with your payments, working to boost your credit score, and having an honest conversation with the prospective landlord are all crucial. When you’re ready to find you’re next apartment, keep these key points in mind and monitor your credit score so that when you’re ready to begin the place application process, you know what you’re dealing with.
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