Your credit could make a big difference in your next apartment search.

Nearly one in two landlords said the results of a credit check were among the top three factors used when deciding whether to accept a tenant’s lease application, according to a TransUnion study. The rise in online credit checks andincreased competition in the rental market, meanwhile, have combined to put more pressure on potential tenants to make their applications shine.

For would-be renters, the credit-check process may seem mysterious. If you’re wondering what landlords scrutinize when they check your credit, here’s an insider’s look, along with strategies for landing a place to live.

How landlords and property managers check credit

A credit check can mean a lot of different things. It ranges from finding out whether a tenant meets a certain standard to poring over pages of account histories.

Janet Akin, a property manager in San Jose, Calif., uses a tenant screening service called e-renter.com to screen rental applicants for her clients who want to rent their properties.

“As a property manager, you have a fiduciary duty to your clients,” Akin says. “You have to go through the data and pull as much as you can.”

When she runs a background and credit check on a potential tenant, she looks for people who have a certain credit rating roughly equal to a 600 FICO score. She asks for higher credit scores when renting out upscale homes or condos. She also looks at social media, county records and bank statements, among other things, to check for consistency.

Here are a few other ways landlords and property managers check credit:

• Landlord associations. Organizations such as the National Association of Independent Landlords offer tenant credit reports to landlords for a fee. Depending on the association, these checks may count as hard inquiries and cause your credit to temporarily dip.
• Tenant screening services. Some tenant screening services offer credit reports; others don’t. On e-renter.com, for example, landlords request a certain credit score range, and the site tells them whether the tenant met or exceeded that requirement. Reports also include evictions, bankruptcies and judgments, along with other background information. Because you initiate the check, it counts as a soft inquiry and doesn’t negatively affect your credit.
• Credit bureaus. Equifax, Experian and TransUnion offer several credit screening products for landlords, including credit reports. These services require you to initiate the check, generally counting the pull as a soft inquiry.

Not all landlords and property managers do credit checks online. Some may request a copy of your credit report or ask you about your credit in person. You may want to make copies of your report, just in case it comes up.

The main credit-related deal breakers for renters

Landlords or property managers generally aren’t looking for immaculate credit, but certain negatives may make them more likely to reject an applicant.

“For things like repossessions of cars or credit cards being charged off, unless there’s a very good explanation, a landlord probably won’t approve that person,” says Dennis Johnson, credit and housing counselor at ClearPoint Credit Counseling Solutions in the St. Louis area.

Small mistakes, such as one late payment on an account that’s now current, tend to matter less, though. To landlords, the histories of accounts generally aren’t as important as their current statuses, Johnson says.

To be sure, good credit doesn’t ensure approval. Factors such as income, criminal convictions and past evictions can also play a big part in the approval process. Talk to the landlord to get a better idea of what he or she is looking for before applying.

FROM:http://www.nerdwallet.com/