Applying for an apartment can have an adverse affect on your credit score if you’re not informed. By understanding what happens when a leasing agent requests your credit score, you’ll be better prepared to minimize that affect. Depending on your particular situation, you may not be affected at all.
The leasing agent will ask for authorization to check your credit report whenever you submit an application for an apartment. When your credit report is checked, a hard inquiry is performed. Hard inquiries have a negative affect, although minimal, on your credit score. Such inquiries occur whenever you put in an application for new credit. Conversely, a soft inquiry has no affect on your credit score and does not show up when your credit report is reviewed. Viewing your own credit score and companies offering you credit without your requesting it are examples of soft inquiries.
You likely will apply at a number of properties when you go apartment hunting. If you do so within a two-week period, credit agencies typically will consider all the credit report requests as one hard inquiry. It is useful to have your credit report on hand during your apartment search. Leasing agents still may require you to allow them to get their own copy, but if there is anything on your credit that might disqualify you, the leasing agent knows beforehand and will not need to perform an unnecessary hard inquiry.
Hard Inquiry Affect
A hard inquiry typically reduces a person’s credit score by five points. Someone with a healthy score and robust credit history may not be affected at all by a hard inquiry from apartment hunting, whereas someone with little credit history or bad credit may be see his credit score impacted by more than five points. Either way, a hard inquiry’s impact lasts between six to 12 months and is removed from your credit report after two years.
The credit reporting agencies understand you are shopping around looking for a good deal when you have a number of credit inquiries from apartments. However, it would be a bad to have an apartment manager pull your credit report when you’re applying for a car loan and credit cards. They would show up as multiple inquiries.
Credit scores are broken down into five categories: hard inquiries, types of credit accounts, length of credit history, debt-to-credit-limit ratio and payment history. Hard inquiries account for only 10 percent of your credit score, while payment history accounts for 35 percent. While keeping hard inquiries to a minimum is a good idea, keeping your bills paid on time will have a greater affect on your credit score.