Landlords typically use fico score 8, which ranges from 300-850, to assess a tenant’s creditworthiness. Fico score 9, which is newer, is less commonly used.
A higher score indicates better creditworthiness, which can lead to more favourable rental agreements and a higher likelihood of being approved for a rental property.
It is essential to maintain a good fico score to increase the chances of finding a suitable rental property.
Understanding Fico Scores
If you’re a tenant, then you need to know about fico scores and what they mean.
These scores determine your creditworthiness and can have a significant impact on whether a landlord approves or rejects your rental application.
Understanding fico scores is essential to improve your credit history.
What Is A Good Fico Score?
A good Fico score ranges between 670-739, while scores above 740 are considered excellent. A score of 580 or below is poor, which will make it difficult to rent a property.
However, having a low fico score does not necessarily mean you won’t be able to rent a property, but it could mean paying higher security deposits and higher rent.
Explanation Of Factors That Affect Your Fico Score
Numerous factors can affect your fico score, including:
Paying your bills on time boosts your score, while late payments lower it.
This is the amount of credit you are currently using compared to how much is available to you.
A high credit utilization score indicates that you may be overextended and can affect your fico score negatively.
Length of credit history
A longer credit history means more data points for creditors to assess risk. As such, it can positively impact your score.
Types of credit
A diverse credit mix is better than a homogeneous one as it shows that you can manage different types of credit.
Every time someone requests access to your credit report, it adversely affects your score.
Which Fico Score Do Landlords Use?
Importance Of Fico Scores For Landlords
As a landlord, it’s important to know the financial reputation of tenants before you lease your property to them.
Fico scores are a widely accepted measure of financial credibility, and they can help landlords to assess tenants’ creditworthiness.
Here are some key reasons why fico scores are important for landlords:
- Fico scores can indicate the likelihood of tenants paying rent on time.
- Fico scores can highlight any potential financial risks or inconsistencies in tenants’ credit histories.
- Fico scores can help landlords to make informed decisions about which tenants to accept and which to avoid.
Credit Check Process For Tenants
Before leasing property to a new tenant, landlords typically conduct a credit check to determine their financial credibility.
Here’s what landlords should know about the credit check process:
- Landlords must obtain written authorization from tenants before running a credit check.
- Landlords can request credit reports from credit bureaus, like Experian or Equifax.
- Landlords must comply with federal fair credit reporting act (fcra) guidelines when conducting credit checks.
- Landlords can use third-party screening services to help run credit checks on tenants.
Different Versions Of Fico Score Used By Landlords
Different versions of Fico scores may be used by landlords, depending on their preferences or the screening service they use.
It’s important for landlords to understand the differences between these versions to make informed decisions about tenant screening.
Here are some versions of fico scores used by landlords:
- Fico score 8: This is the most commonly used version, and it’s based on information from Equifax, Experian, and Transunion.
- Fico score 9: This version is similar to Fico score 8, but it weighs medical debt and collections differently.
- Fico auto score: This version is designed specifically for auto lenders and relates to auto financing.
- Fico bankcard score: This version is specifically designed for credit card companies and is based on credit card usage history.
How To Improve Your Fico Score For Renting
Renting a property is a major life decision that requires not only good behaviour but also a good credit history.
As a tenant, you may wonder which fico score landlords use to evaluate your creditworthiness.
Fico has several scores, but most landlords use the Fico 8 score or older versions like Fico 2, 4, and 5 which are still used by some property managers and landlords.
Steps To Improve Fico Score
If you are worried about your fico score and how it may impact your renting application, you can improve it by following these simple steps:
- Pay all bills on time every time.
- Reduce your credit utilization rate.
- Dispute inaccurate information on your credit report.
- Limit credit inquiries.
- Keep old accounts open.
How Long Does It Take To Improve A Fico Score?
Improving your fico score is not a quick process, and it requires patience and discipline.
Depending on the severity of your credit history, it can take several months to over a year to make progress.
However, some quick wins include paying bills on time and reducing your credit utilization rate, which can have an immediate positive impact on your score.
Tips For Increasing Your Fico Score Specifically For Renting
To increase your fico score specifically for renting purposes, consider the following tips:
- Pay all rent and utility bills on time every time.
- Keep credit utilization rates low.
- Avoid late payments and accounts in collections.
- Keep credit card balances at 30% of the limit or below.
- Plan your rental applications to avoid numerous credit inquiries and rejections.
Improving your fico score for renting purposes can require a few lifestyle changes, such as paying bills promptly and avoiding outstanding balances.
However, the benefits of a good Fico score are worth the effort, as it can increase your chances of finding a great rental home and securing a lower rental price.
Frequently Asked Questions For Which Fico Score Do Landlords Use
What Is A Fico Score?
A Fico score is a credit score that determines the creditworthiness of a person.
What Is The Minimum Fico Score Required For Landlords?
There is no minimum score required to become a landlord, but most landlords usually look for good credit scores (typically 620 or higher).
How Can Landlords Check A Tenant’S Fico Score?
Landlords can check a tenant’s fico score by requesting a credit report from a credit bureau or through tenant screening services.
Can Landlords Reject An Applicant Based On Their Fico Score?
Yes, landlords can reject a tenant based on their fico score but they must comply with fair housing and anti-discrimination laws.
Navigating the rental market is no easy task, but understanding your FICO score is key.
Landlords often prefer the FICO 8 model, providing a clear snapshot of your financial responsibility.
So, keep tabs on your credit, ensure it’s healthy, and impress your future landlord with your financial savvy.