Does an Apartment Credit Check Hurt your Credit Score?

Posted by: TheGuarantors on February 10, 2022

Does an Apartment Credit Check Hurt your Credit Score?

There are many reasons why someone would ask for your credit history. For instance, when you apply for a new credit card or take out a mortgage... or even rent an apartment! Lenders and landlords carry out credit inquiries to determine whether you are likely to be a financial risk. However, how do these checks affect your credit score? Is there a difference when you check your own score vs. a landlord? In this guide ahead, we’ll answer your burning question - does an apartment credit check hurt your credit score?

What’s an apartment credit check?

apartment credit check

Before we dive in, let’s figure out what a credit check is. An apartment credit check reveals your credit history by looking into your bank and credit card account balances. The credit check also shows any outstanding loans or payments. The reason for running the credit check is simple: the better your credit, the more evidence you have that you will pay your monthly rent on time.

Here’s what your landlord will ask you for:

  • Full legal name
  • Social Security number
  • Date of birth
  • Current and former addresses from the last two years
  • Current and past employment

What’s the minimum credit score to rent apartments?

rent apartments

While there’s no universal credit score to rent apartments, the average U.S. renter's credit score was 638 in 2020. The credit score you need depends on where you plan to live, and the policies of your landlord.

The Fair Isaac Corporation, or FICO, specializes in “predictive analytics.” Even though it’s not the only credit-scoring company available, it carries the most weight when you apply for credit. FICO suggests that a credit score of 650 and above is generally more than enough to rent an apartment.

FICO scores range from excellent to very poor:

  • Excellent: 800-850
  • Very good: 740-799
  • Good: 670-739
  • Fair: 580-669
  • Poor: 550-649
  • Very poor: 300-579

Soft credit pull vs. hard inquiry credit: What’s the difference?

When you’re renting an apartment, bear in mind that you’ll be living on someone else’s property. Therefore, the landlord needs to know whether or not you’ll be a financially responsible tenant. For this reason, running an apartment credit check is common practice when applying for rentals.

bill paying

Your bill-paying history is important for the landlord to foster trust in you as a renter, and as a person. However, not all rental credit checks are the same. Similarly, not all credit checks will affect your credit score.

What’s a soft credit pull?

Soft credit checks, also known as soft inquiries or soft pulls, are background checks rather than checks that occur when you apply for a loan. These inquiries don’t affect your credit score in any way and may sometimes happen without your knowledge.

A list of common reasons for soft inquiries include:

  • Checking your own credit report
  • If and when a potential employer checks your credit history to determine your financial reliability
  • A financial institute you are already a customer with, checks your credit score
  • When credit card issuers check your credit to send you a pre-approved offer

🔥 Want to check your credit score? Hop on over to our guide to checking your credit score for free!

What’s a hard inquiry credit check?

hard inquiry check

As opposed to soft credit pulls, hard inquiries are more likely to negatively affect your credit score. A hard inquiry, also called a “hard pull,” is when you apply for a new line of credit or start the process of taking on a major financial commitment. For example, If you apply for a new credit card, take out a mortgage or rent an apartment.

⚠️ IMPORTANT: The Fair Credit Reporting Act requires credit bureaus to tell you when a creditor or other business entity performs a hard inquiry on your credit report. The landlord must ask you to sign a credit screening document before proceeding to run a hard inquiry credit check.

A list of common reasons for hard inquiries include:

  • Applying for a new credit card
  • Applying for loans (including mortgages, car loans, and personal loans)
  • Apartment rental applications
  • Phone or utility applications (like signing up for a new cellphone contract)

Related: Fair Housing Laws and How it Protects Renters in the U.S.

How long do inquiries stay on your credit report?

hard credit pull duration

As we’ve seen above, soft credit pulls might show up in your rental credit check history, but they don’t affect your credit score in any way. They also disappear within 30 days.

On the other hand, hard inquiry credit checks stay on your credit report for 2 years. After this point, they fall off.

For example, If you've been turned down for a loan recently, try waiting at least 24 months. After the 2-year period is over, you can apply again so that the previous inquiry will drop off your credit report.

How does an apartment credit check impact credit score?

Landlords can check credit in a few different ways; some are considered hard pulls while others are considered soft pulls. You are well within your right to ask the landlord what type of credit check they’re going to do.

A hard credit inquiry could lower your credit score by up to 10 points. However, unless you are applying for a large loan, the drop in your score probably won’t be that significant.

However, if you don’t want the landlord to do a hard pull, you can offer to send them your own credit report for an apartment credit check. Since checking your own credit report is a soft pull, the credit check won’t reflect in your credit report.

Do multiple credit checks hurt your credit score?

Can several credit inquiries hurt your score? The short answer is that it largely depends on the kind of credit you’re shopping for. For example, if you’re rate-shopping to find the best interest rate on a mortgage, the major credit bureaus understand that you’ll likely have multiple credit inquiries on your account.

However, let’s say you apply for multiple credit cards in a short period of time. Each of these applications will add a new hard inquiry to your credit report. This might negatively impact your credit score, especially if you’re on the cusp of a good or excellent score.

Related: The Best Financial Literacy Books & Resources to Empower Your Financial Future

Conclusion

Apartment credit checks are performed by property managers to determine if an applicant is likely to pay their rent on time. As a renter, it’s important to be armed with the knowledge of credit inquiries to make smarter decisions about applying for credit. If you want to check your own credit score, go ahead and review it as often you’d like. However, if you’re taking on a big financial commitment, be prepared for a hard inquiry credit check.

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