Even with good credit, looking for an apartment to rent in a city such as San Francisco can be as slow going as running a marathon in a field of molasses. But don’t fret, even though you might have to go through several credit checks in your search for an apartment, it won’t ruin your credit score.
Here’s how you can maintain a good credit score as a renter:
Don’t let your search drag on
Ideally, you should try to apply for several apartments within a single month, rather than spreading your search over a longer period.
If you’re looking for something specific, such as an auto loan, mortgage or an apartment to rent, your FICO credit score will count all of these so-called hard inquiries about your credit as a single hard inquiry if they all happen within 45 days. This means that if you apply for 50 apartments and undergo 50 credit checks within 45 days, your good credit score might take a five-point dip, but not a 250-point nosedive. Hard inquiries typically leave your credit report after two years.
Ask your landlord to use a rent app
Most landlords don’t report payment records to credit bureaus because it’s time-consuming, but new online payment apps are making the process easier. If your landlord reports rent payments to credit bureaus, you could improve your good credit score by simply having your rent automatically deposited through the app each month. And a higher score can make it easier to qualify for a good credit credit card.
Talk to your landlord about setting up a payment system to help you boost your good credit. Although these programs charge small transaction fees, property managers are often willing to cover the cost.
Find an apartment you can afford
You might not think you would ever get evicted or have an account sent to collections, but if you pick an apartment that you can barely afford, you could have serious problems down the road, especially since these negatives stay on your credit report for seven years. Renters face another risk when scrambling to pay for an expensive place: If you start relying on credit cards for your basic expenses each month, this could also hurt your credit score by driving up your credit utilization.
If possible, find an apartment that costs less than 30% of your after-tax monthly income. Make sure you have enough savings to cover emergencies, such as job loss, a family member’s illness or car repairs. By finding an affordable apartment, you’ll also be better prepared to tackle credit card debt, lower your credit utilization and boost your score — and that could save you a bundle in the long run.
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