If you’re looking for an apartment to rent, chances are you’re ready for the credit check the leasing manager will run to ensure you will pay your rent on time.
However, not everyone has the credit they need to meet the qualifications. Some prospective renters newer to the market occasionally get turned down for lack of rental history. Whether you have yet to establish credit, or you have a poor credit history, you may be told you’ll need to secure a co-signer in order to rent your apartment.
What is a Co-Signer?
If you don’t meet the minimum income requirements, have not established credit, or have a poor credit score, co-signers sign the apartment lease with you, taking on the financial responsibility should you fail to pay your rent. A co-signer will need to have a good credit score, be able to prove their income, and show that they have the capacity to pay for the apartment if needed on top of their own financial obligations. A co-signer could be your parent, spouse, or a friend.
Co-signers can exist as a roommate or offer support from a distance. Either way, their name is on the lease; they have a legal right to your space, and a legal obligation to ensure your rent is paid in full. Co-signers also hold a lot of power as they are capable of taking over your lease entirely.
What is a Guarantor?
At Irvine Company Apartment Communities, a Guarantor is required in order to secure your lease. What’s the difference between a Guarantor and a co-signer? A Guarantor simply is there to help you rent your apartment and is held liable should you not pay your rent, and has no rights to live at the residence like the co-signer does.
What Credit Score Do You Need to Rent An Apartment?
Most rental companies want credit scores from applicants to be 620 or higher. People with credit scores lower than 620 may indicate they are a high-risk renter. Read more about what credit score is needed to rent an apartment.
Here are some general guidelines on how credit scores are rated.
- Anything below 579 is poor
- Between 580-669 is fair
- 740-799 is very good
- Anything over 800 is excellent*
Work on Improving (Or Establishing) Your Credit Score
If the rental company or landlord requires a co-signer, don’t be afraid to ask them why so you can see about fixing it. Sometimes, there are certain items in your credit score you were unaware of, such as an outstanding bill or missing payment. Better credit means more apartment options. While there’s no “quick fix” to improve your credit score, with a little work it’s definitely doable! That way, when you continue your search for an apartment, you’ll have an easier time being approved.
How Do You Boost Your Credit Score?
One way to improve your credit score going forward is to pay your bills on time every month. On-time payments will help you improve your credit score because they show positive credit management, and because payment history is the biggest factor in credit scoring. If you are past due on any accounts, bringing those accounts current can improve your score.
Next, if you currently carry high balances on your credit cards, you will want to begin paying them off as soon as possible. (Pay them off, but don’t close the accounts.) Utilization rate is the second most important factor in scores, so paying off your credit card debt will likely improve your credit scores.
Tips on How to Maintain a Good Credit Score
- Monitor your credit reports regularly to ensure the information is accurate. Remember, you can access your reports from each of the three credit bureaus.
- Make all your payments on time.
- Keep your balances on your credit cards low. If you can pay them off each month after you use them, that would be best.
- Be judicious and intentional about when you apply for credit.
- Use caution when closing accounts.
- If you plan to make a big purchase soon, avoid applying for any type of credit at least six months prior to when you plan to get your loan.
- Be patient and give your credit time to rehabilitate if you are trying to improve your score.
How Long do Evictions Stay on Your Credit Report?
Evictions can be found in a separate rental history report, which can be obtained through a tenant screening company. The eviction will typically remain on your rental history report for seven years.
Although your credit report will not show whether you have been evicted, any unpaid rent or fees owed to a landlord or apartment complex may be sold to a collection agency or secured by a court judgment. That collection agency can then report the collection account to Experian. Collection accounts and money judgments remain on the credit report for seven years from the original delinquency date.
For your reference, this is a general guideline on how long certain negative items may remain on your credit report:
- Late and missed payments: 7 years
- Collection accounts: 7 years
- Chapter 13 bankruptcy: 7 years
- Chapter 7 bankruptcy: 10 years
In some cases, it’s just not possible to get a co-signer. One alternative is to use a co-signer service, which is a third-party platform that guarantees to pay your rent if you can’t by charging you a monthly fee (often it can be 10% of your rent).
If you are approved to use this service, you will be charged a fee, even if you never fall behind on it. If they do end up having to pay your rent, you will eventually have to reimburse the co-signing company in full as well as any associated fees.
Keep in mind that there’s still an approval process for this service and that the rental company can decide to decline it.