Landlords commonly check the credit history of potential renters; knowing and polishing yours can hand you the keys to a new home
Dear Let’s Talk Credit,
Yes, it is a common practice for landlords to check your credit when you apply to rent a home or apartment. Just as potential lenders use your credit report to determine if you are a good credit risk, landlords use the same information for the same reason. Landlords may also check one or more of the many specialty bureaus that collect rental history information. Having no credit or rental history is not necessarily bad, but it does not provide the landlord with an accurate way to determine if you will pay your rent. You are correct that your debit card purchases do not get reported to the credit bureaus.
Establishing a positive credit history is a good idea, but I’m not sure that a few months of one credit card account will be enough to help you secure rental housing in Boston. You may need to have someone with an established credit or rental history co-sign your lease for you. If you decide to use a co-signer, ask the landlord if it is possible to have your co-signer removed from the lease after a pre-determined number of months with on-time rent payments. If you can deposit a larger amount, you may be able to convince the landlord to lease to you without a co-signer.
You are wise to be cautious about using credit cards, but it would good for you to begin to establish credit. Applying for a credit card is a good place to start. Plan to use the card for only those purchases that you will pay off each month to avoid accumulating debt. I recommend that you search for a card that provides some type of rewards that would make sense for you. Depending on the rewards card you choose, your purchases will earn points toward airline miles, cash back or other items. As a fresh graduate with a thin credit file, however, you may not qualify for a rewards card right away. I would suggest you pay a visit to your bank since they know you there and talk to a representative about getting a credit card. Whatever you do, do not apply for numerous credit cards within a short time frame as those lender inquiries into your credit report will temporarily ding your credit score.
In addition, your rental payments may help you to build credit as well. Experian and TransUnion include positive rental payments on their credit reports. However, you will need to check with your landlord to see if they report rental history.
Good luck with your move to Boston and let’s keep talking!