What Credit Score Do You Need to Rent an Apartment?

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Most apartment rental listings stipulate that a credit check will be required, but you may be wondering what credit score you need to secure a rental. 

Credit scores in Canada range from 300 to 900 and are ranked in five different categories, from poor to excellent as follows:

• Poor: 300 - 574

• Below Average: 575 - 659

• Fair: 660 - 712

• Good: 713 - 740

• Excellent: 741 - 900

According to a 2020 study by RENTCafe, the average credit score of renters in the United States is 638. However, the exact score you will need to secure a rental will vary depending on the rental market. In a competitive rental market, you may need a much higher score than you might in a more relaxed market. 

The average credit score of Borrowell members in Canada is roughly 660. In general, if your credit score is 660 or higher, you’ll have a good chance of securing a rental. If your credit score is below average, there are still steps you can take to position yourself as a desirable tenant. 

Below, we’ll dig into how you can bolster your rental application, even when your credit score is low. We’ll also discuss what landlords are looking for when they check your credit and the steps you can take to improve your credit score before applying for a rental.

Let’s jump in! 

How Can I Rent an Apartment With a Low Credit Score?

Having a low credit score doesn’t always mean you won’t be able to rent an apartment. Landlords aren’t fixated on a particular credit score, but rather on finding a tenant they can trust to pay the rent on time and respect the property. Landlords look at

While a higher credit score might help you stand out, painting a solid picture of what type of tenant you are is most important. Anything you can do to highlight that you will take care of the property and make your payments on time will work in your favour. 

Use the following strategies to bolster your application and show that you’ll be a reliable tenant. Trying one or a few of these tactics could be enough to help convince a landlord that you’re a qualified tenant. 

Provide the prospective landlord with your rent payment receipts 

While your credit score may be concerning for your landlord, solid proof of on-time payment is sure to inspire confidence. Demonstrating that you have a history of paying your rent on time could help a landlord overlook a low score.   

Source a letter of reference from a previous landlord 

Landlord references are a common aspect of any rental application. A glowing reference from your former landlord will reassure your prospective landlord that you’re a trustworthy tenant. In some instances, this may make you more desirable than a prospective tenant with a higher credit score and no references to lean on. 

Have a guarantor on your lease 

Lease guarantors are common for renters with low credit scores or limited credit history. A lease guarantor is someone with a good credit rating who signs the lease with you. Asking a friend or family member to be your guarantor could help you secure a rental even with a low score. Remember, if you fail to make your rent payments, your guarantor will be responsible for covering them, so it’s essential to uphold your end of the deal.   

Provide bank statements demonstrating your savings 

Sometimes, a landlord can overlook a low credit score if you provide evidence of financial solvency. Showing a prospective landlord a bank statement confirming that you have at least a few months of living expenses saved could be enough to secure a rental, especially when combined with other positive elements like a strong letter of reference and proof of employment. 

Offer to pay multiple months of rent upfront 

In some instances, you may be able to negotiate with a potential landlord to find a way around your low credit score. Offering to pay multiple months upfront could be enough reassurance for a landlord to look beyond your credit score; If you can provide excellent references and proof of savings and employment on top of that, even better! If the landlord works for a property management company, there may be less room for negotiation than an independent landlord who is renting their own property. 

Explain your personal circumstances 

Your credit rating does not define you, and there are countless reasons for a low credit score that have nothing to do with your ability to pay the rent on time. If possible, try explaining your personal circumstances to the landlord. Landlords are people too, and with a little luck, you’ll be able to find someone willing to offer you a break. If you can demonstrate how you’re working to improve your credit (especially any steps you’ve already taken), the landlord might be willing to take a chance on you. 

Avoid “no credit check apartments”: 

During your apartment search, you may encounter listings that advertise that they don’t require credit checks. While this may seem appealing, it’s still probably best to avoid these rentals. The property managers of these apartments know that their prospective tenants are likely desperate to put a roof over their heads, so they may not bother to maintain the units adequately (or at all). Additionally, on the off-chance that you do pay the rent late, the fees for doing so are liable to be exorbitant, adding undue strain to your financial situation. 

Before resorting to one of these rentals, use the tips above to help position yourself positively for a prospective landlord. It can be a little more challenging to find a rental when you have a low credit score, but it’s not impossible, especially if you’re willing to put extra effort into your application.  

Why Do Landlords Check Your Credit?

Landlords are looking for tenants who are most likely to pay their rent on time and respect the property. Landlords check your credit to evaluate your likelihood to pay rent on time.

When there are many promising candidates in the mix, a landlord will likely prioritize those with higher credit scores, as they indicate a more stable financial situation.  

What Do Landlords Look for on a Credit Check?

A landlord uses your credit report to find evidence that you can and will pay the rent on time. Your credit score is only one indicator of your creditworthiness. Your landlord will assess the following aspects of your credit report in context with the rest of your application.

• Your debt to income ratio: A low income and a large amount of debt likely suggest that you’re living beyond your means. A landlord may not feel confident renting to you in this instance. Landlords generally like to see that you earn 3 or 4 times as much as the rent price.

• Outstanding debt: A landlord will take note of any outstanding debt you are carrying. Not only does the amount of debt matter, but the type. For instance, someone with a large amount of credit card debt may appear less reliable than someone with the same amount of debt spread across student and car loans. 

• Your payment history: Landlords want to know that you will pay your rent on time, so they’ll check for signs of late payments and for accounts that were sent to collections or charged off.  

• Bankruptcies: A history of bankruptcy on your credit report could hurt your chances of securing a rental. However, if the bankruptcy was in the distant past and you can currently demonstrate financial solvency, a landlord may be able to see past it.

• Evictions: Landlords will look to see if any items related to an eviction have been recorded on your credit report. This can be a major deal-breaker for landlords, so you should make sure there aren't any incorrect items related to a potential eviction. These include judgments or collections filed by a previous landlord. If you read your credit report and find any errors, there are specific steps you can take to dispute eviction-related items on your report.

Landlords know that credit reports are only part of the story. A landlord may be able to overlook bad marks on your credit report if your application has many other positive aspects, such as a positive reference from a previous landlord. 

Credit Score Improvement Tips 

If your credit score is lower than you might like, there are many steps you can take to improve it. It can take some time to see an uptick in your credit score, so don’t expect instant results. Know that improving your credit is an ongoing process, but one worth committing to. 

• Continue paying bills on time: On-time payments account for 35% of your credit score. Set up automatic payments to ensure you never miss one.  

• Pay down your balance: Credit utilization makes up 30% of your credit score, and it’s recommended that you never use more than 30% of your available credit. Paying down your balance can be a quick win, especially if you’re over that 30% threshold. 

• Pay more than the minimum: Every little bit extra you can afford to pay will help reduce your credit utilization and improve your credit score.

• Increase your credit limit: When you increase your credit limit, your credit utilization is automatically lowered. If you’re eligible for an increase, you could see an automatic benefit from the change in your utilization percentage.  

• Diversify your credit mix: Lenders like to see that you’re capable of managing different types of debt. When it makes sense, consider adding new types of credit, such as a car loan or line of credit, to your credit mix. 

• Dispute errors: Errors like erroneously reported late payments, and other inaccuracies can affect your credit score. Make it a habit to review your credit report regularly and dispute anything that looks suspicious. 

• Keep your oldest accounts open: Your credit history accounts for 15% of your credit score. The longer your history, the better. With this in mind, keep your credit accounts open, especially the oldest ones. If you do close any, avoid closing multiple accounts at once. 

• Consider a secured credit card: If you’re not eligible for many credit products, a secured credit card is an excellent place to start working to improve your score. These cards are backed by cash that you put down upon opening the card. As you use the card and make on-time payments, your credit score will gradually increase.

How Can I Prepare My Credit for My Rental Application?

It typically takes months to see large increases in your credit rating, so the further ahead you can plan, the better. That said, there are some things you can do in the short term to ensure your credit report looks healthy ahead of filing a rental application.

• Lower your credit utilization: Credit utilization accounts for 30% of your credit score. If possible, pay down existing debt before applying for a rental. This will give your credit score a boost, even if just a small one. 

• Avoid any hard credit pulls before applying for a rental: Your credit score will typically dip a few points when a hard credit inquiry is performed. With this in mind, don’t apply for any credit products right before applying for a rental. If you’re considering opening new accounts, wait until after your rental application is processed. 

• Dispute errors on your credit report: If there are errors on your credit report, having them removed could boost your score by a few points. Since it takes a few weeks for errors to be contested and corrected, start this process early. 

• Don’t close any credit accounts right before applying for a rental: You might be excited about paying off your car or student loan, but closing out these accounts may actually cause a dip in your credit score, especially if they are one of your oldest credit accounts. If possible, wait to close older lines of credit until after securing your rental. 

What If I'm Looking To Buy?

If you're looking to buy your first apartment or condo, your credit score may be even more important than if you're looking to rent. But there are also things to consider if you're looking to buy, including saving for a downpayment and qualifying for a mortgage. There are steps you can take to improve your home approval chances and increase your home-buying power, including:

1. Saving a larger down payment

2. Adding a co-signer

3. Working with a credit union

4. Working with an alternative lender

5. Using a cashback mortgage

The Bottom Line

While a low credit score can make it more challenging to find an apartment, there are still plenty of ways you can demonstrate to a prospective landlord that you’re a great tenant. Your credit rating is just one aspect of your rental application (albeit a significant one) that a landlord uses to assess whether you’ll be a reliable tenant. Providing proof of employment, letters of reference from previous landlords, or bringing on a guarantor can give you a good chance of securing a rental, even with a low credit score. 

If you know your credit score could use a boost, begin using our tips before submitting your next rental application. With a little bit of planning and effort, you can boost your score and give yourself a good shot at securing your next rental.