NJ Landlords & Credit Checks: The Facts

credit check

As society shifts from the use of tangible papers to swiping a tiny piece of plastic to make purchases, credit is pushing closer to the forefront of the realm of finances. Despite the satisfaction of handling cash in the checkout line, credit cards, whether we like it or not, are becoming the norm. Along with owning credit cards comes the inevitability of your credit score. Good credit holds more significance today than it ever has before. Many people simply don’t realize how impacting a credit score can be, especially when it comes to real estate decisions – even renting. If you’re considering renting an apartment or house, know that the first thing a landlord will set eyes on is your credit score and report.

When you complete a tenant application form, you provide a variety of information about yourself, but typically it’s not enough for most landlords to make a solid decision. This drives the landlord, property manager, or rental agency to hike one step further into your personal information. The main reason to check an individual’s credit history is to review one’s capability or incapability of paying rent. A landlord doesn’t want a renter who will never pay rent on time.

Every time that a potential lender checks your credit, it will appear on your credit report. Too many checks will damage your credit score, decreasing your chance of acceptance to rent anywhere. Be careful not to apply to too many places at one time. Many inquiries in a short amount of time is looked down upon as it can imply repeated rejections and/or reckless financial behavior. It’s possible that some credit score models will combine multiple inquiries into one, which will prevent you from getting penalized for “shopping around,” but this cannot be guaranteed.

Landlords prefer to have renters who are clean: clean house and clean credit. Obviously, if you have good credit and an adequate history, there shouldn’t be any reason that your application wouldn’t be accepted by the landlord. On the other hand, if your credit score does not meet the landlord’s standards, they could outright reject your application. It’s also possible that they may require you to pay a larger down payment or find a cosigner. Our credit history defines who we are, therefore landlords may be hesitant to offer you residence if your score is less-than-stellar.

In the past, making credit payments on time didn’t boost your credit score (because they weren’t given to credit agencies), but thankfully that has changed. If your landlord reports your on-time payments, credit bureaus will include it in your credit report. Because more and more rental agencies are reporting positive rental history, renting responsibly can now have a positive effect on improving your credit score.

Keep in mind that missed and late payments will also show up on your credit history. A tenant-screening report will show an eviction if you’ve had one. This is different than a credit report, and typically shows up in the rental application process. In the likely chance that your landlord sends missed payment updates to a debt collector, it will show up and remain on your credit report for 7 years in addition to 180 days from when you began missing payments. Don’t put yourself in this position. Make payments on time. Having trouble making payments? Give us a call and let us give you a FREE holistic debt evaluation.

What else can credit score affect?

Cell Phones: The one item that seemingly everyone has today is a cellphone. Believe it or not, your credit score can influence whether or not a phone company offers a service plan to you. It is possible to acquire a plan that doesn’t necessitate a credit check, but be aware than a phone service application may initiate a hard inquiry. Remember, all hard inquiries show up on your credit report and could potentially lower your credit score.

Auto Loans: The majority of people need to take out a loan in order to purchase a car. Obtaining and acquiring a loan is affected by your credit score. Taking it one step further, the amount of the loan and the interest rate are dependent on how well you measure up. In this case, it’s best to shop around for the best auto loan rates. Though it’s true that several inquiries can damage your credit score, a majority of credit scoring models will regard multiple auto loan inquiries in a short period as a single inquiry.

Though this article discusses only three crucial parts of life that are influenced by credit scores, there are a myriad of others. It’s so important that we aim to make payments on time and not take part in other activities that will cause destruction of our credit score. Like anything else in life, your credit score needs consistency and some TLC for it to thrive.

Advertisements