What Credit Score Is Needed To Rent A House?

For families or individuals who aren’t ready to purchase a home or don’t want the commitment of a long-term mortgage, renting a house is an ideal option. The renting process typically involves a thorough financial check to ensure the applicant can afford the rent. One key factor that landlords and property managers consider when assessing a tenant’s financial reliability is their credit score. So what credit score is needed to rent a house? A

Although there is no standard minimum credit score needed for renting a house, you’ll generally have the best approval odds if you have a decent credit score. 

What is the minimum credit score needed to rent a house?

The minimum credit score needed for renting a house varies from landlord to landlord. Generally, most landlords require applicants to have a credit score of at least 620 to be considered for rental housing. This means that if your FICO score is lower than 620, you may be denied an application or asked for additional security deposits or co-signers before being approved. Some landlords may also consider applicants with lower scores depending on other factors such as employment status, income level, and debt-to-income ratio (DTI). It’s important to know what other criteria your potential landlord requires along with the minimum credit score needed for renting a house before applying for rental housing. 

How does a credit score affect renting a house?

A credit score often plays a significant role in renting a house as it indicates a tenant’s financial reliability and responsibility. Landlords and property managers use credit scores as a screening tool to assess a tenant’s ability to pay rent on time and take care of the property. After all, renting is a risk. 

The higher your credit score, the better your chances of being accepted by landlords.

Payment history

Having a good payment history builds credibility with landlords and shows that you take your financial responsibilities seriously. Maintaining a solid payment record shows that you can manage money well and be trusted to pay rent on time. If a landlord looks at an applicant’s credit report and sees numerous late payments or high levels of debt, they may think twice about approving the application. 

Credit utilization ratio

Credit utilization refers to the ratio between the amount of available credit a person has and how much they are using. A high credit utilization ratio — more than 30% of total available credit being used— can signal to landlords that the applicant is relying too heavily on debt and may be at risk of defaulting on their obligations. A low credit utilization ratio (less than 30%) shows that an individual is managing their debt responsibly and could be seen as more reliable by landlords.

Length of credit history

In terms of credit, a longer credit history means you’re more reliable. You’ve had more time to establish good spending and money management patterns. When applying for a rental home, a longer track record can indicate that the applicant is financially responsible, pays bills on time, and uses debt responsibly. Because credit score calculations often account for age, having a longer history may mean a higher score.

Types of accounts

A well-rounded credit mix of various types of accounts is seen by most lenders as a sign that a person is a responsible borrower. 

If you have no credit or only one type of credit, such as a student loan or an auto loan, this lack of diversity in your credit report may cause some landlords to question your ability to manage multiple payments.

New credit inquiries

Multiple inquiries within a short period of time can signal to credit reporting agencies that the applicant is seeking credit or attempting to take on new debt, which can lower their credit score.

This is why inquiries on a rental application are generally viewed as a negative factor.

Landlords and property managers tend to prefer tenants who have a stable credit history with few inquiries, as this can indicate that they don’t have a history of taking on more debt than they can handle.

Other important considerations when renting a house

Credit is important, but it’s only one factor in the application. When you’re preparing to apply for a rental property, there are some other important things you’ll want to take into consideration and ensure are in order. 

Previous landlords and rental history

Previous landlords can provide information about the tenant’s capability to pay rent on time, their ability to maintain a residence responsibly, and any potential issues that may have arisen during their tenancy.

If you’ve been evicted, this is a major red flag for future landlords. An eviction can remain on your public record for seven years. It’s important for tenants to be honest on their rental application and provide accurate information to landlords and property managers. This can help establish trust and build a positive relationship throughout the rental process. Even if you’ve had issues in the past, don’t try to cover them up. Let the landlord know and explain how circumstances have changed. 

Income 

Landlords often want tenants to make at least three times the rent. If the monthly rent for a property is $1,500, a tenant should have a gross monthly income of at least $4,500. However, requirements can vary depending on the region you live in. As a rule, a tenant should not spend more than 30% of their gross income on rent in order to maintain financial stability and have enough money left over for other living expenses.

In addition to verifying that applicants meet certain income criteria, landlords may also want to make sure that they have sufficient funds available in case of an emergency such as job loss or illness. This ensures that applicants will be able to cover any unexpected costs during their stay at the rental property.

Having higher levels of income can help mitigate any negative effects of poor credit on a rental application.

Financial documents and bank statements

Proof of assets can include bank statements, tax returns, pay stubs, or other forms of documentation that demonstrate your income and savings. These documents provide landlords with an indication of your current financial standing. If you have a savings account with enough money to cover a few months of rent, it can help increase your approval odds. The more assurance you can provide to show the landlord you’re able to pay, the better. 

References

References give landlords a deeper understanding of who you are as a person, beyond the documents and credit score. 

When creating your list of references, make sure they are people who know you well and can attest to your character and work ethic. It’s important for these people to have had direct contact with you in some capacity, like as an employer or teacher. If you’ve been a tenant in the past, having a current or previous landlord as a reference can be extremely beneficial. You should also provide information about how long each reference has known you and in what capacity. 

Make sure to include your references’ full names, phone numbers, addresses, and email addresses (if applicable). Most landlords will call references during the application process so have them ready for when the time comes. 

Obtain a guarantor if needed

If you have less-than-ideal credit, renting isn’t necessarily impossible. A guarantor, who is typically a family member or friend of the tenant who acts as a guarantor on the lease agreement, can help you qualify. The guarantor must meet certain criteria to guarantee the tenant’s rental obligations. They must be over 18 years old, have a good credit score, and own their own home. 

The guarantor is not only responsible for ensuring that rent is paid on time, they are also responsible for any damages caused by the tenant during occupancy. In some cases, the grantor will even pay for some of the tenant’s security deposit in order to get them successfully approved for a rental. 

Prove your financially stable 

You should aim for a minimum credit score of at least 620 before you apply for a rental home. If you don’t meet the credit criteria, a high income and proof of finances can show the landlord you’re stable and can afford the rent. No landlord wants to go through the process of evicting a tenant, so it’s important to prove yourself as a worthy tenant if you want to get approved. 

FAQ