Applying for Rental Apartments: Will It Hurt Your Credit Score?

Q: I have rented apartments in the Washington, D.C. area for the past 30 years. I plan to move to New England, but before I buy a house, I want to rent for a while to experience a northern winter. I have a pretty good credit score, but I’m worried about what will happen when I apply for rental housing and the landlords do a credit check. When I purchased my first car a few years ago, seeking partial financing, the dealership sent inquiries to nine places, and my credit score plunged over 130 points. I’ve worked hard to build it back up but am worried about going through that again. What should I do?

A: Most landlords will check prospective tenants’ credit, and if you submit many applications, it can affect your credit score.

It doesn’t hurt to visit a lot of potential rentals, but be choosy about where you submit an application. “It is true that if you end up having to apply to a lot of apartments, it could possibly hurt you,” said Ariel Nelson, a staff attorney at the National Consumer Law Center.

The tenant screening process cannot begin until you submit an application, according to the Consumer Financial Protection Bureau. You can ask the landlord or leasing agent what kind of tenant screening they perform, what criteria they use, and whether they conduct a so-called “hard” credit inquiry. A “hard” inquiry can affect your credit score and is typically done when a consumer wants to open new lines of credit, like a mortgage. Some landlords will look at your credit history in a way that doesn’t impact your credit score, known as a soft inquiry.

“I would narrow down your applications and figure out the top three,” said Craig S. Shames, a real estate lawyer in eastern Massachusetts. Depending on how tight the housing market is where you’re looking, and your time frame, you could submit one application at a time.

There are many tenant screening companies, and the industry is less regulated than the big three credit reporting agencies — TransUnion, Equifax and Experian. The latter have government oversight with respect to their scores and methodology, while tenant screening companies operate with less transparency. Their reports typically include a credit report that comes from one of the credit bureaus, along with other information, such as eviction and criminal records. Reports from credit reporting agencies and from tenant screening companies can contain errors, according to the National Consumer Law Center.

In addition to requesting your free annual credit report to make sure there are no errors, you can do the same with the tenant screening company used by your prospective landlord. You can request a copy of your own report from that company. Requesting your own report does not affect your credit score.

For weekly email updates on residential real estate news, sign up here.