Looking for a new place to live is exhausting. Not only do you have to review properties online, but you also have to check them out in person to get a better understanding of the rental unit. However, the toughest of all is to get your application accepted and approved as a tenant. Amidst all the factors included to determine you as the right fit as a renter, your FICO score plays a vital role in your rental process. Many landlords today are using tenant screening services to have better access to and understanding of your FICO score. It helps them gain a better understanding of your financial responsibilities and analyze your future payment behavior.
The higher the FICO score you have, the higher your chances of landing a better rental place with more favorable lease agreements and a lower security deposit. Therefore, understanding how your credit score affects your rental application can help you prepare better and improve your chances of securing the home you want. In this blog, we’ll check out some possible ways in which your credit score influences your application.
How Does Credit Score Impact Rental Applications?
As much as finding a new place to rent is hectic for renters, for landlords too, it is quite overwhelming. A landlord has a lot of things on their plate to take care of and manage daily. The last thing they would want to deal with would be an issue with the rent. To avoid any hassle with receiving monthly rent on time, landlords conduct thorough background research, including checking how high your FICO score is, as it reflects your creditworthiness and reliability. Here are some of the ways your FICO score can affect your rental application.
Approval Chances:
Your FICO score plays a critical role in determining whether you are a suitable renter to onboard. Based on that, your rental application gets passed or rejected. Many landowners turn to landlord management for a thorough rental application process. So, you can already expect a strict screening process you need to crack. Therefore, if you are someone with a low score, it can limit your options, making the rental cost higher and the process a lot more challenging.
Your credit score gives a detailed explanation and understanding of your money management knowledge and financial responsibilities. Landlords refer to this score to review and better judge your future payment behavior. As they are running a business, they are more likely to prefer candidates with a better credit history. This is because it shows they are more likely to pay their rent on time without fuss.
Security Deposit Amount:
The security deposit amount is a crucial aspect of renting. In case your FICO score is lower than the preferred credit score range of the landlord, you will have to pay a costly security deposit. Although you can still rent the property, the hefty security deposit upfront can be a financial burden for you. The extra amount you pay before onboarding as a renter serves as a safety net for the property owner. It will help them cover any potential losses if you cause costly damage to the property or fail to pay rent.
Lease Terms and Conditions:
Your credit score can also have a significant impact on the terms and conditions of your lease. If you don’t have a FICO score that satisfies the criteria of your landlord, they may impose strict terms. Such lease agreements might usually include a shorter lease timespan or even a high monthly rent. However, there are certain rules that a landlord needs to abide by, like how much rent can they raise in California. This restricts landlords’ freedom to charge any random amount they feel is suitable. If you feel you are violated in the rental aspect because of your poor credit score, of course, you can take legal steps to resolve the issue.
Application Fees and Background Checks:
Landlords may charge higher application fees and conduct more thorough background checks if your credit score is low. These additional steps are meant to ensure that they are making a sound decision by renting to you. These checks might include verifying your employment, contacting previous landlords, and assessing your overall financial stability. Being prepared for these additional steps can help you navigate the application process more smoothly.
Availability of Rental Properties:
Landlords with high-demand properties or those in competitive rental markets are more likely to have strict credit score requirements. A low credit score can limit your options when it comes to finding rental properties. Some landlords might not be willing to rent to someone with poor credit, reducing the number of available properties for you to choose from. This means that if your credit score is low, you might need to look for rentals in less competitive areas or consider properties managed by smaller landlords who may have more flexible criteria. Expanding your search area and being open to different types of properties can increase your chances of finding a suitable rental.
End Note
Your FICO score plays a critical role in evaluating your rental application process. If your credit score is low and you need to rent soon, be honest with potential landlords, provide strong references, and show proof of steady income. These strategies can help you navigate the rental market and find a home that meets your needs. However, we would strongly recommend that you take control of your credit score. It will not only help with renting but also open up more opportunities in other areas of your financial life. So, start making positive changes today, and you’ll be in a stronger position to find the perfect home tomorrow.
