Renting Stage 1 - BEFORE You Start to Look

Updated 5-05-2023

This Expert Adulting Module Will:

Help you to NOT waste your time & money
Keep you from lowering your credit score unnecessarily
Potentially help you qualify for a greater number of rentals
Help you ace your rental application!

Most Important Things to Understand

In the end, the landlord decides if they want you. Following the steps below will give you the best chance of getting the rental you want.
Knowing your own rental qualifications will keep you from wasting money on application fees for places you don’t qualify for.

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Jump to a Specific Step

1 - Make Sure Credit Reports Accurate

2 - Know Your Credit Score

3 - Clean Up Your Social Media

4 - Save Up the Money You'll Need

5 - Know How Much You Can Afford

6 - Address Any Negative History

Questions For You to Answer

(see info below for how)

Have I done everything I can to look as good as possible to a potential landlord?
Do I know my own credit score and income so I will know if I meet their qualifications before I pay my application fee?

Renting Module Format

To help you find, qualify for, and enjoy your new rented apartment or house, I’ve mapped out all the steps involved and then broken them into 4 Renting Stages to make them easier for you to understand & work on:

Stage 1 - BEFORE You Start to Look (this page) – PLEASE DO NOT SKIP THIS STAGE
Stage 2 - Finding the Rental You Want
Stage 3 - Understanding the Lease / Rental Agreement
Stage 4 - After You've Signed the Lease

BEFORE You Start to Look for Your New Rental

Take these 6 steps to ACE your rental application and have the best chance of getting approved for that new apartment or rental home you want!

NOTE: These steps apply to you AND any potential roommates.

STEP 1: Make Sure ALL 3 of Your Credit Reports are Accurate

Almost every landlord / property manager will pull your Credit Score when you fill out a rental application. Since your Credit Score is calculated from the information in your Credit Reports, it’s important to make sure your Credit Reports are correct and look as good as possible. (See Credit Reports for more information.)

TIP: Ideally, this step would be done a couple months ahead of when you want to start looking for your new rental so you have time to deal with any problems you may find.

IMPORTANT

You have 3 Credit Reports & you need to make sure ALL 3 ARE CORRECT. You can get a FREE copy of each of your Credit Reports at www.AnnualCreditReport.com.

Search "how to read a credit report" and "how to dispute a credit report" for more information.

Potential Issues You Could Find:

Credit accounts that aren’t yours – this could be caused by someone typing in a social security number incorrectly or accidently assigning an account to the wrong person. It could also be the result of someone stealing your identity and opening accounts in your name!
Items on your credit reports that you are unaware of – for example, bills that you weren’t aware had been left unpaid that you could then pay and ask that the record be removed from your credit reports.

Catching these kinds of things BEFORE you start actively looking for a new place to rent can:

Improve your Credit Score & help you qualify for more places
Prevent your rental application from being turned down (& losing any application fee you had to pay)
Prevent you from having to pay more in security deposits and/or rent than necessary. (Landlords / property managers look to your Credit Reports and Credit Score to determine how “risky” you are as a potential renter. The “riskier” you appear, the more they will want you to pay in upfront deposits &/or in monthly rent.)

STEP 2: Know Your Current Credit Score

Once you’ve made sure all your credit reports are correct, find out what your current Credit Score is. Most landlords have a minimum credit score you have to exceed (each landlord has their own).

TIP: Credit scores significantly affect your life EVERY DAY - not just when renting a new place. Learn how your credit score helps or hurts you and how to get it for FREE in Your Credit Score.

Technical Stuff

TransUnion (one of the 3 Credit Reporting Agencies) is now offering something they’re calling a “Resident Score.” They use a different mathematical calculation on the same credit report information to create a “Resident Score” vs. a “Credit Score.” They are marketing it by saying that a Credit Score is designed to determine if a person is a good credit risk for a bank loan whereas a Resident Score is designed to determine if the person will pay their rent. The Resident Score falls on a scale of 350-850 and scores in the range of 560-850 are “good” according to TransUnion. Will we see it being used more? Don’t know.

A Real-Life Story

Belinda was in her early 20’s and still living with her parents but she was really ready to have a place of her own. She had worked her way up from being a server at a restaurant to being the restaurant manager and was finally making good money.

One day she sat down with her paycheck and figured out how much she could afford to spend on rent each month (and still have enough left to do the things she wanted). Then she went looking.

After looking at quite a few places, she found the apartment she absolutely loved! She asked the property manager how much she had to make each month to get accepted and she earned more than that! She immediately filled out the application and paid her $50 application fee.

She was soooo excited! Before she even left the parking lot, she was on the phone with her best friend telling her all about it. She then went home and told her mom that she would be moving out, posted all about it on her social media accounts and started packing. She just couldn’t wait!

But then she didn’t hear back from apartment complex so she called them and learned that SHE HAD BEEN TURNED DOWN! What? Why? She made more than enough money to qualify.

Turns out that when they ran her credit score, it was really low. She hadn’t even considered that her credit score might be a problem because she always paid her few bills on time. She had no idea what was going on.

After some investigating, she discovered that a clerk somewhere hadn’t recorded her payments on the school loan she had for the 1 semester she went to college so it showed her in default which totally tanked her credit score.

She was able to get it fixed and a couple months later did move out on her own but she could have saved herself a lot of grief, a lot of explaining to her friends and family, and the $50 application fee, if she had known to do what we’re talking about here.

STEP 3: Clean Up Your Social Media

All the information the landlord can find about you will influence his / her decision on whether to rent to you or not. As part of their investigation, most landlords will look you up online (Instagram, TikTok, Twitter, Facebook, LinkedIn, etc.). You may want to look yourself up on all these websites now and try to get rid of anything that might look bad to a landlord. Information on how to do this can be found in Your Reputation.

STEP 4: Save Up the Money You'll Need

Whether you are going to be renting for the 1st time or the 21st time, it’s going to take quite a bit of money to get you into a new place and set up.

CAUTION: (for Current Renters) You will probably NOT receive any refundable security deposit you paid on your current rental in time to use it as part of the money you’ll need to move in to your new place.

Money Needed to Move In =

Application Fee +

Security Deposit +

1st Month’s Rent +

Down Payment &/or Connection Fees for Utilities +

Cost of Moving +

Pet Deposit / Addt'l Fees

DEFINITIONS:

Security Deposit - additional money the renter has to pay before they move in. The amount usually equals one month’s rent + any situation-specific fees required for things like poor or no credit history, extra keys, etc. This money IS NOT rent. The landlord will hold this money until at least the end of your lease. Most deposits are refundable at the end of the lease – some are not.

Utilities - electric, gas, internet, trash, water, etc.

Cost of Moving - moving company, boxes, storage, truck rental, paying / feeding friends who help you move, etc.

Additional Fees - could include a refurbishing fee (money you have to pay before you move in for the landlord to use to fix up the place after you move out), pet deposits, admin fees, etc.

STEP 5: Know How Much You Can Afford

A rental payment of 25% or less of your Take Home Pay (net pay) is ideal and will leave you money to enjoy a special coffee or time out with your friends. Some landlords will allow you to spend up to 33% of your income on rent but that is likely to leave you strapped for cash for everyday stuff.

A trustworthy roommate who will pay part of the rent is one option to help qualify for a more expensive place.

DEFINITIONS:

Take Home Pay - the money you actually receive after all the taxes & fees are taken out

CAUTION #1: Just because a landlord will allow you to pay a higher percentage of your income on rent, doesn’t mean you should. It’s no fun to spend all your time working just to pay rent on a place you rarely get to enjoy because you’re always working!

CAUTION #2: The cost of living in your rental will be more than just the rent. You will have ongoing costs for things like: internet, electricity &/or gas, water / sewage, trash, & rental insurance. (Food is important too!)

STEP 6: Prepare to Address Any Negative History You Have

Most rental agents / property managers will investigate your rental history, eviction history, and criminal background in addition to the items above. They may do this through a Tenant Screening Service or on their own.

If you have anything in your rental &/or life history that may not look great to a potential landlord, you may want to think about ways that you can explain the situation &/or show how you’ve done better since it happened.

One Idea: A letter from you or, better yet, an outside person / organization that was involved, that explains the situation as positively as possible (keep it honest or it will backfire) may help you when you are trying to qualify for a new rental. For example, if there is something in your rental history that looks bad but wasn’t really your fault (e.g., your roommate was the problem), a letter from your previous landlord explaining the situation may help.

Giving a potential new landlord the letter or discussing the situation with them BEFORE you give them your application fee may save you some money if they are not open to working with you. On the other hand, they may respect you for bringing it up which may help you. It’s a tricky situation either way.

TIP: If an “adverse action” is taken based on a Tenant History report provided by a Tenant Screening Service (e.g., your rental application is rejected), legally the rental agent must tell you that. You can then request a free copy of the Tenant History report they used and dispute any inaccurate or incomplete information.

What To Do Now

Find your own answers to the Questions for You to Answer.
Review the Most Important Things to Understand.
Continue to Renting Stage 2 – Finding the Rental You Want
Share this with any potential roommates &/or other friends / family / co-workers who could use it.

Learn More (My Sources)

https://www.mysmartmove.com/SmartMove/blog/residentscore-tailored-tenant-screening.page

https://www.investopedia.com/best-tenant-screening-services-5070361

https://www.ftc.gov/legal-library/browse/statutes/fair-credit-reporting-act

https://rentprep.com/blog/tenant-screening-news/resident-score-credit-score/