Apartment applications and your credit: what each one costs

In a tight rental market, the usual advice is to apply to several places at once so you don’t lose out. That’s sensible for getting a lease. It can be rough on your credit file, because each application may come with its own credit check, its own fee, and sometimes its own hard inquiry.

The tricky part is that you usually can’t see which kind of check you’re getting until it shows up on your report weeks later. You can find out sooner if you ask the right question before you pay.

What a landlord actually pulls

A landlord has a legal reason to look at your file because you started the transaction. The FCRA allows a report to go to someone with a “legitimate business need for the information” in connection with “a business transaction that is initiated by the consumer” (15 U.S.C. 1681b(a)(3)(F)), and a rental application is that kind of transaction.

What arrives on the landlord’s desk can be one or more of these:

• A credit report or score pulled from Equifax, Experian or TransUnion, often through a screening company.
• A tenant screening report from a specialty agency, which can include eviction filings, rental history and criminal records. These come from separate companies with their own files, covered in specialty reports.
• Both, bundled into one screening package.

Only the first one can create an inquiry on your Equifax, Experian or TransUnion report. And whether that inquiry is coded hard or soft is a choice the screening company makes when it requests your file.

Why rental applications don’t get the shopping break

FICO’s rate-shopping protection groups inquiries “made within a short time frame (14 to 45 days) into one inquiry,” but its own list of eligible loan types is mortgage, auto loan and student loan. Rental screening isn’t on it. VantageScore’s published shopping rule covers mortgage and auto lenders, so rentals aren’t covered there either.

Example. Say you apply to four apartments over two weeks, and each landlord uses a screening service that pulls a hard inquiry from TransUnion.

FICO says one additional inquiry takes fewer than five points off for most people, so four inquiries aren’t a disaster for most files. They’re also not free, they last a year in FICO’s math, and they land right before you might need credit for furniture, a car or a utility deposit. The fees can sting more than the points: if each of those four places charges $50, that’s $200 before you’ve signed anything.

Questions to ask before you pay an application fee

These are routine questions, and a leasing office can usually answer them on the spot.

1. “Which screening company do you use?” Write it down. If you’re denied later, you’ll want to know whose report it was.
2. “Does it run a hard or a soft credit check?” If they don’t know, the screening company’s website often says.
3. “What’s your minimum score or main credit requirement?” If you’re clearly below it, you’ve saved a fee and an inquiry.
4. “Do you accept a report or screening I’ve already done?” Some landlords will, and some won’t because they want the report from their own service.
5. “If I’m not approved, will you refund the fee or hold the unit while I find a cosigner?” Policies vary a lot.

The answers let you rank places. Apply first where you’re most likely to qualify and where the check is soft, then stop once you’re approved.

If you’re turned down because of something in a report

When a landlord takes adverse action based in whole or in part on a consumer report, 15 U.S.C. 1681m(a) requires a notice. It has to include the name, address and phone number of the agency that supplied the report, a statement that the agency didn’t make the decision, your right to a free copy of that report within 60 days, and your right to dispute anything inaccurate or incomplete. If a credit score was used, the notice must also disclose it.

Use that notice. Get the free report it points to and read it line by line. Tenant screening files sometimes contain eviction cases that were dismissed, someone else’s records under a similar name, or debts that aren’t yours. Our guide to adverse action notices shows how to turn the letter into a dispute.

Your plan for the next application

Before you start touring, pull your own credit reports so you know what landlords will see. That’s always a soft inquiry. Then shortlist places, ask the screening questions above, and apply in order of best fit rather than all at once.

If credit is the main obstacle, read credit scores and renting an apartment for what landlords commonly weigh besides the score, such as income, rental history and deposits. And if you later see a rental inquiry from a company you never applied with, treat it as an unrecognized inquiry and check it out. See hard vs. soft inquiries for how to tell what kind of pull it was.