It’s not just homebuyers who have to deal with credit issues before they can move in to their new digs. Increasingly, renters have to find ways to pass the credit test, too. Landlords often use credit reports to gauge the risk and reliability of a potential renter.
You can’t afford to dismiss a credit problem when apartment-hunting — it’s just gotten too competitive out there. According to MPF Research, apartment rentals rose by 215,000 in the U.S. from the first to second quarter of 2010. Apartment vacancies also fell from 8.2% in June 2009 to 6.6% in June 2010.
Another study from Rent.com says that 81% of apartment managers and landlords have seen a drop in the credit scores of potential rental customers. Another 43% of landlords said they had to reduce their credit standards to fill their units.
"Given the economic climate, many property managers are still experiencing higher vacancy rates, and some might be willing to bend the rules a bit in order to keep their units occupied," says Peggy Abkemeier, president of Rent.com, an online rental listing company in Santa Monica, Calif.
So where do you start with your credit repair strategy? To begin, know what landlords are expecting in terms of credit scores. Rent.com says that many landlords peg the preferred credit rating to be at least 670 for rental customers.
So step one is to go ahead and check your credit score to see where you stand. Once every year, you can get a free credit report from AnnualCreditReport.com, including a report from each of the three major credit score providers — Experian (StockQuote: EXPN), Equifax (Stock Quote: EFX) and Transunion.
If you fall short, you’ll need a plan to bypass the credit issue before you’re approved for a rental deal. Get going on that front with these tips: