Importance of Good Credit & Rental Applications

A good credit score may earn you a reduced monthly rent.

A good credit score may earn you a reduced monthly rent.

When you apply to rent a new property, your landlord will give you a thorough background check to make sure you are a suitable tenant. One of the things he will review is your credit score. If you have a good credit score, you could have several important advantages over less qualified tenants. These benefits should give you one more reason to keep track of your credit card bills and protect your credit score.

Good Credit Score

Your credit score is a number between 300 and 850 that represents your risk as a borrower. A high score means you have been responsible with your bills in the past and lenders feel more comfortable letting you borrow money. A landlord uses your credit score to measure your ability to pay the monthly rent. According to New York University, landlords consider a score of 700 or higher a good credit score. If your score is close to this level, landlords will be lining up to give you a rental application.

Approval

Before you can take over a rental, the landlord must approve your rental application. This is the first area where your good credit score is important. A landlord may deny an applicant with a low credit score. In addition, a landlord may use credit scores as a tiebreaker among multiple applicants. If you are competing for the perfect home against other renters, your good credit score might be the extra edge you need to get the rental.

Lower Rent

Good credit can also help you out with your monthly rent payments. Your credit score represents the risk that you might miss payments. Missed rent payments are a huge headache for landlords. If you have proved your ability to responsibly pay your bills, your landlord might give you a discount on your rent payments. In other words, the landlord charges less qualified applicants a higher monthly rent to compensate for the higher chance that they may skip payments. This is an example of how maintaining good credit can save you money.

Lower Deposit

Many landlords require a security deposit from new tenants. This money is held by your landlord during your lease. If you damage your rental property or break your lease, the landlord keeps the deposit. If you don't have any problems, your deposit is usually returned. Landlords charge applicants with bad credit a higher security deposit because they are worried that these applicants are more likely to cause damage or break the lease. Your good credit can also give you the important benefit of a reduced deposit.

About the Author

David Rodeck has been writing professionally since 2011. He specializes in insurance, investment management and retirement planning for various websites. He graduated with a Bachelor of Science in economics from McGill University.

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