There is a common misconception that your credit score will determine whether or not you are approved for rental assistance programs, such as Section 8 and public housing. However, the short answer to this question is no — an applicant can still be accepted without having their reportable finances evaluated by one of these systems!
However, after being approved for Section 8 and other rental programs, you will likely need to find a landlord that will accept your housing voucher and approve you for a lease.
Most landlords will perform a credit check before approving you for a lease agreement to rent their property. Therefore, knowing your credit score and credit history before applying for rent assistance can be very helpful in helping you avoid untimely hang-ups with landlords.
Does Rental Credit Check Affect Score?
A rental credit check is when a landlord runs your name, address, and other identifying details through an independent company to find out any outstanding debts or public records that could affect your tenancy. It’s important to note that just because you have outstanding debt or unpaid accounts, this doesn’t necessarily mean you won’t be considered as a tenant (depending on the landlord).
If you’re looking for a place to live, it’s important that your credit is in good shape. However, many landlords will only do soft checks, which won’t affect the score — though this may not always be true!
If they plan on doing hard contact or interviews before deciding whether someone qualifies as an applicant (or tenant), make sure to ask about their screening process beforehand, so there are no surprises later down the line.
Tips For Renting With Low Credit Score
Here are three tips for anybody who has a bad credit score and wants to know how to rent a place:
- Renting a room: If you cannot afford to rent an entire house or apartment, consider renting just a room instead. This way, your rates will be lower, so you can avoid having to pay for multiple utilities and other expenses.
- Get roommates who have good credit: Sometimes, just putting yourself in an environment with people who have good credit is all it takes to boost your credit score over time. If none of your current friends have good enough credit, consider making some new friends who are responsible for their money.
- Pay rent on time: When asking someone with good enough credit to cosign for you, make sure that the only reason you need this is because of your bad credit score and not because of other problems such as slow pay or an inability to pick up after yourself around the apartment complex.
Resources For Bad Credit Rental Assistance
Rental assistance, especially for those with bad credit, can be hard to come by. Luckily, you’ve got plenty of options for assistance if you need it. These rental assistance programs are meant to help low-income families and individuals afford stable housing to become self-sufficient members of society once more.
- The U.S. Department of Housing and Urban Development (HUD) has an entire division dedicated to providing affordable housing for very low-income families or people who have a tough time finding a place to live due to their financial situation.
- Massachusetts has multiple resources where you may find rental assistance.
- Massachusetts has an extensive list of government subsidies for low-income people, including housing.
Can a Landlord Affect Your Credit Score?
There is a common myth that if you’re late on your rent, this will affect your credit score. This is not the case. Landlords do not report information about their tenants to any nationwide consumer reporting agencies such as Equifax or TransUnion. Therefore, what they know and how they handle it does not affect a person’s credit rating.
The only way for a landlord to affect your credit rating would be if they somehow reported you for not paying rent to an external collections agency or some other creditor company that does report tenant behavior to credit bureaus.
However, while landlords typically won’t report anything directly about their tenants’ financial behavior to the big three (TransUnion, Equifax, and Experian), they may still affect your credit score in other ways.
Is a Landlord Credit Check Hard or Soft?
A landlord credit check can be done through either soft or hard inquiries. Soft inquiries typically occur when someone has requested a copy of their credit score from a credit bureau.
These inquiries stay on the person’s file for up to two years but do not affect their credit score because they are shared with other companies asking for similar information.
Hard inquiries occur when someone pulls your credit report from one of the three major bureaus to decide whether or not you should be given a loan, such as a landlord trying to decide whether to approve you for an apartment rental.
A hard inquiry can drop a person’s credit score by about 20 points and remain on their records for two years or more.
How To Navigate a Low-Income Housing Credit Check
Many low-income housing properties check tenant credit before approving applications. Some owners disqualify applicants with a high debt to income ratio or significant credit issues like eviction or bankruptcy.
There are ways to get past this obstacle, though.
- If you have a bad credit history, the first step is to request a copy of your credit report from each of the three major companies. If you discover errors on your reports, contact the company reporting it and file a dispute.
- If you were evicted in the past, ask the property owner if they would consider a “Letter of Explanation” instead. Explain your side or what happened and how you plan to keep it from happening again.
- Another option is to consider asking for an “Employment Letter.” This is one of the most helpful things you can submit when trying to overcome credit issues because we live in a society where job stability is no longer guaranteed, and many employers check credit before hiring someone.
Does a Section 8 Rental Application Hurt Credit Score?
There’s a common misconception that Section 8 housing or any government-subsidized housing hurts your credit score. Many people believe that the presence of Section 8 on an applicant’s credit report causes their score to drop, but this is not true.
Not only does Section 8 not affect your credit score, but there’s no real way for landlords or property managers even to check your credit anyway. Private housing providers are not allowed access to information about the applicant’s participation in government assistance programs, whether through an online search or otherwise.
If you’re applying for private rental housing and receive Section 8 assistance at any point during your tenancy, neither the owners nor their management company will have any idea whether you have one of these vouchers unless you tell them yourself.
The credit score impact of rental assistance is clear. Rental assistance can help people improve their credit scores and access better housing opportunities in the future.
If you are looking for ways to improve your credit score, look into rental assistance programs in your area. They may be able to help you take the first steps towards improving your credit history and accessing more affordable housing in the future.
💡American Rescue Plan and Emergency Rental Assistance Program
Leave a comment if you have any questions and we will do our best to get back to you. Remember we are not a government approved housing authority and we can’t tell you what landlords will do. We are here to help share our experience and knowledge in hopes that it can help in your journey to get the assistance you need during these uncertain times.