Do a quick Google search for the paperwork needed to rent in NYC, or check Naked Apartment’s renter’s checklist, and you will be floored with all of the references, paperwork, paystubs, and ID requirements that some landlords and management companies ask of potential tenants. The first time I tried to rent in New York, I remember taking a moment to confirm that brokers knew that I was not trying to buy a place. I didn’t know why I needed to supply all of this.
The short story: New York is an expensive and active market, and management companies and landlords want to be sure that they are accepting tenants that can be trusted to pay rent each month, on time.
One of best quantitative ways for landlords to do this is to check someone’s credit score. So, it’s important to know your credit score and what it could say about you.
What is a credit score?
Everyone has a credit score. It is a numerical value that is meant to highlight to potential lenders, or in this case landlords and management companies, the risk associated with leasing to a person.
In short, it’s a way for landlords to know whether or not you can be easily trusted to pay rent each month. Plain and simple.
How Do I Know if I Have a Good Credit Score?
The typical rule of thumb is that any FICO score above 700 is considered “good” and shows that you are a low-risk person to have as a tenant. This, however, is not a hard and fast rule. Landlords surely do not have the same stringent credit requirements that, say, a bank has around loans. Think of the 700 rule as a good baseline to have in mind when judging how well you are doing in the credit department, and whether you need to get your financial checks and balances in place.
Are There Different Kinds of Credit Scores?
This is one of those “yes and no” answers. Yes, technically you have many, many credit scores. But, your FICO score, as calculated by the three credit bureaus Equifax, TransUnion, and Experian, is the one that is used for the vast majority of credit reporting. This will be the score that your landlord or management company will want to see to help them determine whether you meet their criteria for tenants.
Why Do I Need to Care About This?
Landlords and management companies will want to review your credit score before you sign a lease, for assurances that you won’t slip on your rent each month. Dealing with a delinquent tenant, or in the worst case, and eviction situation, is something they obviously want to avoid. (Trust me, eviction is not as glamorous and romantic as they portray in Rent).
Does this mean you will have to find a guarantor to cosign a lease with you if you have a score below 700? Probably not. From anecdotal evidence, it seems that anyone with a score above 600 is typically accepted by landlords without much question. Landlords, after all, have many criteria by which to judge and select lease applicants: credit score, annual salary (that 40x rule), personal and previous landlord references, and their own gut reactions to meeting potential tenants.
So, I Don’t Need to Worry About My Credit Score?
A credit score is still a quantifiable way to measure someone’s responsibility. If you’ve let debts slip by in the past, and you’ve ruined your credit, then you will surely have a hard time finding a landlord to accept you without a guarantor — which should be the least of your worries if you are in terrible debt and need to shovel your way out of that hole. No amount of sweet talking can get you out of that.
*If you want to continue down the rabbit hole of credit education, pop over to myFICO where you can get lost for a while en route to becoming a credit expert. Suze Orman would be proud of you.