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Are you ready to move into your first apartment? Unfortunately moving into a new pad isn’t as easy as loading up a moving van and hauling all your possessions up the stairs. It’s important to know what your potential landlord will be looking at before they approve you. So, before you start packing up all your stuff into boxes, take a look at this article and find out the things you’ll need to take into consideration before renting an apartment.
Yes, it is legal for a landlord to pull a tenant’s credit report when assessing them. However, a landlord must obtain written consent from the tenant before performing a credit check. These credit checks are considered a hard inquiry and may negatively affect your credit scores.
Landlords may ask for your consent by sending you a separate document to sign or they may include it in your rental application, which authorizes them to check your credit.
Once you’ve gone to visit a potential apartment, and you’ve talked to the landlord about the possibility of you moving in, they will perform a credit check before approving you as a tenant. This is to make sure that you’ll be able to keep up with rent payments every month and to see whether or not they’ll be taking on too much risk by renting to you.
Once your landlord has your consent, they may pull a copy of your credit report from either Equifax or TransUnion; Canada’s two credit bureaus. In some cases, a landlord may also access your credit report through third-party services that do background and credit checks on tenants.
When a landlord checks your credit, they’ll be able to see your credit score and credit history. They’ll use this information to evaluate your risk as a renter. Here are some things your landlord will check when checking your credit:
Every time you make a payment, are late on making one or fail to keep up with payments altogether, the information goes on your credit history. So if you have a lot of late, missed or partial payments, it can indicate that you’ll have trouble paying your rent on time. This can cause the landlord to reject your application.
Landlords will use your credit scores to determine your likelihood to pay rent. If you have a low credit score, your landlord could come to the conclusion that you’ll have problems paying your rent. So, it’s important to get information on your credit history and score before you start looking at apartments.
If you’ve had a lot of problems with debt in the past, your prospective landlord will see this and will probably not approve you. Even if you’re moving into a low-rent, small apartment, your future landlord may rent to you if your income is not high enough to cover your rent and debt obligations.
Many landlords will also look for any derogatory remarks on your credit report to determine your financial risk and financial responsibility. Previous evictions, a foreclosure on your house, and accounts in collections are all red flags. Even a record of excessive amounts of open and cancelled credit card accounts could be considered a red flag because it indicates that you may be financially disorganized.
When it comes to landlords, their apartment properties are their business. Therefore, like any business, they take on a significant amount of financial risk when bringing in new tenants who are essentially becoming their clients. Every time someone they’ve approved fails to make their rent payments or needs to be evicted, it’s going to cause problems for the landlord’s income. Because of this risk, they’ll want to determine not only if you have good credit, but good financial standing in general, as well as whether you’re prone to causing other problems, of the illegal nature or otherwise.
For obvious reasons, most landlords probably won’t rent to someone who seems suspicious, has been evicted a lot, or has a prominent criminal record. So, at the same time as they’re running a credit check on you, landlords may also perform a “Tenant Screening Report.” This is a form of background check, which will help them get a better idea of who they’re renting the apartment to. This includes, but is not limited to, a criminal background check, a history of eviction or “unlawful detention” (meaning a tenant has had to be legally evicted or removed from their dwelling or workplace), and verification of your current employment.
Having a low credit score is not necessarily the end of the world. When it boils down to it, a good landlord wants to know, first and foremost, that they’ll be receiving the rent on time every month like clockwork.
Either way, poor credit doesn’t have to mean staying in your parent’s basement for the rest of your life. However, taking the proper steps to build up your finances and keep your credit score at a reasonable level will definitely help you out in the eyes of your future landlord.
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