Did you know that 44.1 million households rent her house? That is a little more than 35% of all households that live in rented accommodation. But sometimes it feels like the lease application process can be as rigorous as applying for a mortgage.
However, there is no exact minimum credit rating required to rent a home. Instead, your credit rating is a general indicator of your reliability. If you have low or no credit, you may find it difficult to rent.
How are credit scores determined?
Your credit score is a number that takes into account five different factors. Understanding how each aspect affects your score can boost your credit score.
- Payment history, 35%: Consistent on-time bill repayments keep your score healthy. Late or missed bills can affect your score.
- Loan drawdowns and loan balances, 30%: Taking on debt and borrowing can affect your score but improve on-time repayment. Credit utilization refers to how your debt is balanced. For example, a maxed out credit card will hurt your score.
- Credit history length, 15%: The longer you make on-time repayments, the more reliable you are.
- New credit, 10%: Taking out a new credit card or loan leads to falling scores in the short term.
- Credit mix, 10%: Ideally, you want different types of credit.
Why do you need good credit?
A landlord’s income depends on the tenant paying his rent on time. If the tenant stops making payments, the landlord can no longer pay off the home loan or perform general maintenance. It could put her in a difficult situation. Strong credit scores indicate that you are reliable if you make repayments on time. Someone with low or no credit is more risky for the landlord.
Some landlords offer rental properties without credit. While these may appear attractive to renters with poor credit ratings, the properties are typically not well maintained or comfortable to live in. Your landlord may not perform routine maintenance such as Unclogging drains.
What else do landlords look for in future tenants?
While landlords value your credit rating, this is not the be-all and end-all when renting a property. They also want to see that you are a good tenant. Assuming you’ve rented in the past with no problems (e.g. you always get your deposit back in full) and have strong references. In this case, a landlord might be more amenable to an applicant with a lower credit rating.
If you can prove stable income by other means, a landlord might overlook your credit history and proceed with the creation a rental agreement. Include payslips and bank statements with your rental application.
How to determine if your credit rating is strong enough
It is best to do some research on your credit score before attempting to rent an apartment. Therefore, you can take the necessary steps to improve it or find alternative means to prove your financial stability and reliability. You can check your credit score online for free. Look for red flags like late payments that can affect your rental application.
What is the minimum credit rating for renting?
It depends on the landlord, the location and the quality of the rental property. While there is no minimum credit rating to rent a home, you should aim for somewhere over 600. If you are looking to rent in a high demand area you may need a score above 700.
You may find more sympathetic landlords with rental apartments than with houses if you have a low credit score. Corresponding experientialthe average credit score for apartment renters was 638. However, as with houses, there is no exact minimum.
How do you improve your credit score?
There are many ways to improve your credit score. Here are our tips:
- Make timely bill payments.
- Pay off any overdue payments.
- Consider getting a credit card.
- Use your credit across different accounts.
- Don’t do anything – red flags will eventually disappear from your credit report.
What to do with bad credit?
If you have bad credit, consider ways to improve it. Also, make sure you are upfront with your prospective landlord. They’ll find you more trustworthy if you’re transparent about your situation than if they find out through a credit check.
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