Has your rental application just been rejected? Determined to make lemonade out of lemons, you resolve to find out why you were rejected and change the situation so that your next application is approved.
Assuming that you filled out the application correctly and made no obvious mistakes such as bringing your pet rattlesnake or a running chainsaw to the rental office, what are the most likely reasons for your rejection? Rent Café recently released their findings on the top reasons for rental rejection – and the results may surprise you.
1. Neglecting to Make Payments – Sean McQuay, Credit and Banking Expert at NerdWallet, says, "A lot of rental agreements require a credit check. They are not checking your credit score per se, but they are going to make sure that you pay your bills on time." It's one thing to be late on your bills, but it's another to be so irresponsible that you let accounts go into default and trigger other adverse actions.
Over half of the reasons for rejection (53.1%) involve records of default and the subsequent actions from creditors (collections, civil court lawsuits, liens, or judgments against you). Why would people rent to you when you've already shown that you are a risk to pay your bills at all?
2. Poor or Insufficient Rental History – According to Rent Café, 15.4% of denied rental applications are due to either negative or limited rental histories. Even if you have never defaulted on accounts, a history of late rent payments suggest that you may be a bigger headache than a property owner is willing to take on. Of course, any rental history showing past damage or other failure to maintain a home or apartment is another red flag.
If you've never rented before, a landlord has little to go on to evaluate your risk. You may be passed over for applicants that clearly show less risk of non-payment.
3. Criminal History – A criminal history was cited as the reason for 11.9% of rental rejections. Behavior that is irresponsible enough to give you a criminal record is going to be difficult to overcome. It's important to show that you have paid your debt for any past criminal behavior and only engage in responsible behavior now, such as holding a regular job and paying any and all recent bills on time.
Your credit score is still an important factor. Millennial Money Expert Stefanie O'Connell explains the importance of a credit score this way: "Credit can be a measure of reliability because it's one of the only ways that we really have to distill a person's reliability down to a single number." You can check your credit score and read your credit report for free within minutes using Credit Manager by MoneyTips.
While the above categories can adversely affect your credit score, you can have a poor credit score for other reasons. Rejection simply from poor credit scores accounted for 7.9% of rental rejections in the Rent Café study.
You may be surprised to find insufficient income far down the list, in the combined category of negative or insufficient employment history or income at 7.1% – but you can overcome that with on-time payments. Sure, the odds are lower that you can pay your bills when you have limited income, but landlords don't care how you get your money (within reason – see "criminal history" above). They just care that you pay your rent on time and in full.
In short, give evaluators as positive a record as possible. You can't erase past actions, but you can take constructive financial actions that can improve your credit score, such as making all payments on time and reconciling old debts. Show potential landlords that any irresponsible behavior, financial or otherwise, is in the past and that your recent behavior merits their trust. It would probably help to continue the moratorium on rattlesnakes and chainsaws.
If you would like to see your credit report and credit score within minutes for free, check out Credit Manager.