When you apply to rent an apartment, prospective landlords may pull up information on you including your criminal history, renting history, and credit report. Younger and newer renters tend to have lower credit scores than other age groups, so even college graduates earning plenty of money at their first jobs may worry disproportionately, as compared to other factors, about how their credit report affects their apartment application. Making matters worse is that your credit score is determined in part by the number of hard inquiries made into your credit – in other words, every time a prospective landlord pulls up your info, it impacts your credit score. Learn all about how apartment applications affect your credit report below.
The two types of credit inquiries
To understand how your rental applications might affect your credit score, it’s important to distinguish between the two types of credit inquiries. The first type is called a soft inquiry. This term describes an inquiry for which a business checks your credit report without your consent to pre-screen you for special services, offers, or products.
If this sounds fishy, know that it’s relatively impactless – in fact, it’s how banks decide whether to send you those frequent unsolicited letters offering you deals on loans, new credit cards, and more. In other words, any time a bank extends you an unsolicited offer, it means a soft inquiry into your credit report has been made, and due in part to the frequency of these inquiries, they don’t affect your credit report. Soft inquiries additionally include any time you request a copy of your credit report or give a potential employer your consent to view your credit report.
The second type of credit inquiry is called a hard inquiry or hard check. This is the category of concern as you apply for apartments. Hard inquiries describe credit checks conducted after you apply for any form of credit.
Is a credit check with a landlord a hard check on your credit report?
Yes, a credit check with a landlord is a hard check on your credit report. When a landlord looks into your credit score, it counts as a hard inquiry because when you rent an apartment, you set up a legal arrangement to borrow a piece of property from someone – an arrangement analogous to having a certain amount of money available to use at your leisure on a credit card or in the form of a business or personal loan.
How do landlord hard inquiries affect my credit score?
Hard inquiries can comprise as much as 10 percent of your credit score. This means that with every apartment for which you apply – and, therefore, with every landlord who checks your credit score – you put your credit score at risk of decreasing by a few points. A negligible change in your credit score isn’t in and of itself a cause for concern, but if too many hard inquiries appear on your credit score in a short timeframe, your credit report may deter potential lenders – landlords included – from working with you. An excess of hard inquiries may suggest that you’re seeking out loans left and right because you have no money.
What can I do to avoid this problem?
In some cases, credit bureaus will consolidate hard inquiries that come from similar institutions or people into one inquiry, a move that will certainly benefit your credit score. Since this isn’t always the case, if you’re worried about your credit report, then an especially easy way to avoid this issue is to only apply for apartments you’re certain are right for you. Narrow down your list of 10 potential new apartments to just three or four, and you should be fine. If considering your credit score causes you to be more specific about your apartment hunt, then that can only be a good thing.