Do Apartment Credit Checks Lower Your Score?

One of the few times an apartment credit check appears on your credit report is when you first apply for the dwelling, and it usually lowers your score. However, unless you applied for several credit accounts in the past year, an apartment credit check will have almost no impact on your credit.

Identification

An apartment credit check lowers your score, even though rental history does not appear on your credit history. Any time you request credit or a creditable account, such as for an apartment or utilities, the Fair Isaac Corporation (FICO) scoring formula used by most lenders dings your score up to five points and sometimes has no effect.

Potential Damage

Even though a few points off a credit score may not seem like much (the FICO model ranges from 300 to 850), six or more inquires are a seriously derogatory item and do more damage to your score as a whole than individual inquiries. Inquiries stay on your report for two years, but only affect it for one year.

Considerations

The FICO formula lumps all credit inquiries to certain types of loans, such as auto loans and mortgages, together as one inquiry if you apply within a short period of time, but not for apartment credit checks. Thus, you should not apply for apartments more than once or twice a year. If you face constant rejections on rental applications, you probably have credit problems and need to repair your credit history.

Tip

You can overcome bad credit when apartment hunting by having someone cosign on your apartment or offering to put up a larger deposit. Some apartment complexes advertise that they do not perform credit checks. Either way, run your credit reports for free from Annual Credit Report and look for negative events, such as late payments and collection accounts. You can also leave comments on your credit report to explain negative items and write a letter to the landlord about circumstances beyond your control, such as unemployment.