What Credit Report Do Landlords Use?

Landlords utilize credit reports as a fundamental tool to evaluate a prospective tenant’s financial responsibility and reliability during the rental application process. These reports offer insights into how an applicant has managed financial obligations, providing a basis for assessing their ability to meet rental payments.

The Major Credit Bureaus Landlords Utilize

Landlords, or the tenant screening services they employ, commonly obtain credit information from the three major nationwide credit bureaus: Equifax, Experian, and TransUnion. These bureaus are responsible for collecting and maintaining extensive consumer credit data. While slight variations can exist, the core information across these sources is largely similar.

Each bureau offers tenant screening services designed to provide landlords with relevant financial histories. For instance, TransUnion offers SmartMove, and Experian provides its own tenant screening services. These services facilitate the process of accessing an applicant’s credit report, which requires the tenant’s explicit authorization.

Understanding Credit Scores Relevant to Rental Applications

Landlords consider credit scores to gauge an applicant’s financial risk. FICO Scores and VantageScore are the most widely used. FICO Score 8 and FICO Score 9 are frequently checked by landlords, as they are considered industry standards for rental applications. VantageScore models, such as VantageScore 3.0 or 4.0, are also utilized, particularly for applicants with limited credit history, as they can sometimes generate a score where FICO might not.

An acceptable credit score for landlords generally falls within the range of 600 to 739, though this can vary based on the specific landlord, property type, and market demand. Many landlords look for a score of 620 or higher, with some competitive markets or higher-end rentals often seeking scores of 650-700 or even above 670. Some tenant screening services may also use specialized “rental” or “resident” scores, such as Experian’s ResidentScore, which are tailored to predict rental payment behavior.

Key Information Landlords Scrutinize in Credit Reports

Beyond the overall credit score, landlords examine several specific data points within a credit report to assess a tenant’s financial habits. Payment history is important, which reveals whether an applicant has consistently paid their debts on time. Landlords pay close attention to late payments on credit cards, loans, or utilities, as these can indicate potential issues with timely rent payments. A single late payment may not severely impact an application, but a pattern of multiple late payments is a significant red flag.

Outstanding debts and the debt-to-income (DTI) ratio are also reviewed. Landlords assess an applicant’s existing financial obligations, such as credit card balances, student loans, and auto loans, to determine if they can comfortably take on new rental payments. A high DTI, which represents the percentage of an applicant’s gross monthly income that goes toward debt payments, can raise concerns about their ability to manage additional expenses like rent. While specific thresholds vary, a DTI above 40% may cause rejection.

Public records, which include bankruptcies, evictions, liens, and civil judgments, are also reviewed. These entries signify severe financial distress or legal issues and are significant concerns for landlords. While evictions may not always appear directly on a credit report, if unpaid rent or fees related to an eviction were sent to collections, they would then show as a collection account. Collection accounts, whether from unpaid rent, medical bills, or credit card debt, indicate past financial difficulties and can negatively impact a tenant’s credit score and rental eligibility.

Credit inquiries are also visible. There are two types: hard inquiries and soft inquiries. Hard inquiries occur when an applicant applies for new credit, such as a loan or credit card, and can temporarily lower a credit score by a few points. Soft inquiries, which include checking one’s own credit or pre-approved offers, do not affect the credit score and are often used by landlords for initial screening without impacting the applicant’s score.

Accessing Your Credit Report and Addressing Discrepancies

Individuals are entitled to a free copy of their credit report from each of the three major credit bureaus—Equifax, Experian, and TransUnion—once every 12 months via AnnualCreditReport.com. Regularly checking these reports is important to ensure accuracy and identify errors or potential identity theft. Reviewing these reports before applying for a rental can help applicants understand their financial standing from a landlord’s perspective.

Should an inaccuracy be discovered on a credit report, federal law provides a process for disputing inaccuracies. Disputes can be submitted directly to the credit bureau online or by mail, and it is advisable to provide supporting documents. Credit bureaus are required under the Fair Credit Reporting Act to investigate a dispute within 30 days, or up to 45 days in certain circumstances, and correct any verified inaccuracies. If the information furnisher does not respond within the timeframe, the item may be removed.