Moving In: Why Landlords Will Check Your Credit

Moving In: Why Landlords Will Check Your Credit

Written by Bryan Daly
Fact-checked by Caitlin Wood
Last Updated January 13, 2018

Are you ready to move into your first apartment? Unfortunately, living in a new pad isn’t as easy as forking over your first and last month’s rent, 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.

Looking for more information on credit inquiries? Check out this article

Your Credit History, Credit Score and “Red Flags”

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 at 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.

Before deciding to rent, make sure you understand your own credit report

Credit History

Firstly, remember that your credit history is recorded. 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. Typically in Canada, any negative marks in your history will remain there for about 6 years. 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 to start renting the space. Even if you’re moving into a low-rent, small apartment, your future landlord will want to know that you can keep up with payments.

Credit Score

They’ll also request your credit score, the three-digit number that creditors and lenders will use to determine your stability when it comes to paying and dealing with credit. If you have a low score, of course, 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.

“Red Flags”

One very important thing to know about a credit check is that any bigger credit and debt problems you’ve had in the past can be marked as “Red Flags.” These are negative points in your credit history and are something any good landlord will take note of determining if you’re a financial risk. Red Flags can be due to a number of things, including previous evictions, a foreclosure on your house, etc. Even a record of excessive amounts of open and canceled credit card accounts could be considered a red flag because it shows what might be a history of credit debt or financial disorganization.  

The Tenant Screening Process

When it comes to landlords, their apartment properties are their business. Therefore, like any business, they’re taking a lot of financial risks 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 who has a prominent criminal record. So, at the same time as they’re running a credit check on you, landlords will 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 a verification of your current employment.

Moving In With Poor Credit

While having a criminal background, or history of eviction can be the nail in the coffin for getting on a landlord’s good side, having a low credit rating 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. So, if you’ve got an unfavorable credit score, whether it’s because of recent unemployment, or temporary problems with debt, try explaining this to the landlord. With any luck, they’ll have a bit of faith that you’ll bounce back and approve you regardless.

Read this other article to find out if you have Bad Credit.  

Another good idea might be to get the help of a parent, relative or good friend to co-sign a lease with you. This way, the co-signer takes on the lion’s share of the rent, in the event that you can’t, and will assure the landlord receives full payment each month. On top of this, a little extra motivation for the landlord could be your offering to pay a higher security deposit or throw in a few extra months worth of rent.

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.    

For more information on the type Credit Check that might be done by a potential landlord, check out this article posted on the Canada Mortgage and Housing Corporation.

Rating of 3/5 based on 5 votes.

Bryan is a graduate of Dawson College and Concordia University. He has been writing for Loans Canada for five years, covering all things related to personal finance, and aims to pursue the craft of professional writing for many years to come. In his spare time, he maintains a passion for editing, writing screenplays, staying fit, and traveling the world in search of the coolest sights our planet has to offer. Bryan uses the BMO Cash Back Mastercard to earn cash back on everything from boring bill payments to exciting excursions. He is also a strong saver, holding both a TFSA and an RRSP account in order to prepare for his future while taking full advantage of tax benefits.

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