Renting Without A Credit Score

As a part of Project FICO (a project that I embarked on several years ago), I started doing some investigative work. My research still continues to this day, but it has already come up with some pretty interesting results.

One of the questions that I was seeking to answer through my research was “do I need a good credit score in order to rent?” Whether it is an apartment, town home, or even a house, we all need shelter. And I used to be under the impression that you must have a good credit score in order to rent.

So, do you need a good credit score in order to rent? The answer may surprise you, but I have found the answer to be “no.”

Here is a detailing of some of my findings…

I started out by posting a question on the Savings Advice Forum, which is a forum that I frequently contribute to and help answer anonymous questions. The question that I posed was whether or not good credit was required in order to rent. And the answer that I gained was essentially that private landlords will be a lot more lenient if you have bad credit or no credit. However, the big corporate property management companies usually require good credit in order to qualify as a tenant.

However, I did not stop there. I decided that I needed to go to the source…

I called out to different property managers. What I did was call out to a few property managers in various cities (Appleton, Saint Cloud, Hartford, Boulder, and Winston-Salem). I “disguised” myself as a potential tenant and asked what their policies were on approving tenants with no credit history (I stated that I had no debt and did not borrow money in the past).

The answers varied a little, however they were all of the same spirit.

Here is the scoop: your credit history and your credit score is a very small piece of the puzzle that they look at when approving tenants. They are more concerned about your rental history (which is sometimes shown on your credit report), your income, and your criminal background.

When a property manager looks at your credit report, they are actually more interested in finding “red flags” such as bankruptcy filings, defaults, and debt settlements. As long as they do not see those items on your credit report, you are in the clear.

Most of the property managers said that having no credit score does not disqualify you from getting approved! In fact, someone with no credit score is favorable compared to someone with a bad credit score!

There are some catches, however. One of the property managers I spoke to said that he might require a co-signer. Another property manager said that they might require a higher security deposit (two times the monthly rent).

I have said it before and I will say it again. Your CREDIT SCORE is different than your CREDIT REPORT. While the credit report is a detailing of your history with credit, your credit score is just a three digit “grade” for your relationship with debt. And this is not my opinion: it is a fact.

Your FICO credit score is based on 5 factors:

  • Payment History
  • Total Debt
  • Length of History
  • Types of Credit
  • New Credit

The only items that are factored into your credit score are installment loans and revolving credit (such as credit cards or signature lines of credit). The credit score only factors in debt; it does not factor in anything else

In summary, your CREDIT REPORT and your CREDIT HISTORY are important to a potential landlord. While they may look at your credit score, they will take it with a grain of salt. And actually, do you know who was able to get approved for a pretty sweet townhouse with absolutely no credit score? THIS GUY!

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