Guide: What You Need to Know About Renting Your First Apartment & Using Rent to Build Credit

Rent apt with bad credit

By Rebecca Lake, Naomi Mannino and Jessica Sillers

So you’re ready to rent an apartment or a house, but aren’t sure how to navigate the rental landscape, especially if you have bad credit, no credit, or would like to request that your landlord start factoring rental payments into your credit score.

You’ve come to the right place to learn all about renting your first apartment and what impact your credit score has, if you’re ready to make the big move.

Here is a what you can expect in this guide. Jump directly to the section you want to read first:

According to Credit Sesame data, 70% of our members are renters, and as home prices continue to climb, owning your own home may not be realistic in the near future, especially for Millennials who are saddled with student loan debt.

Credit Sesame data also shows that the Millennial generation is mostly renting. Those who 25 or younger, 86% are renters and 14% are homeowners, while among those who are 25-34, 16% are owners and 84% are renters.

Our data shows the clear credit score differences between those who are renters and those who are homeowners. Those who rent, have more credit scores that fall in the poor category (over 80%), than those who own (roughly 15%).

Rent apt with bad credit

The good news is, this younger crowd has time to improve their scores, so they can start thinking about making a bigger purchase, such as a home or car.

Tip: When you improve your credit score, you qualify for lower interest rates — which can save you thousands over the life of your loan.

We’ve put together a complete guide that shows you all of the right moves to make, what factors to consider when moving, how to save more money, and we even listed the top 10 cities that are rental-friendly – particularly for those who need to improve their credit scores. If you want to learn more about where you stand, find your free credit score with Credit Sesame.

What is TransUnion® SmartMove® and how can it help me?

Many landlords, whether they operate as individuals or as part of a large property management company, perform rental background checks to assess an applicant’s financial footing. Experian, Equifax, and TransUnion include rental payment history information on credit reports if they have it available. For consumers who don’t have much or any experience with credit products like loans and credit cards, a renter’s credit report, so to speak, is a great way to show your financial management habits.

You won’t know which bureau a prospective landlord will access for a rental background check. A service like TransUnion My Smart Move can help you get your history in front of a new landlord.

TransUnion SmartMove allows independent landlords and rental applicants to use a screening process similar to that used by larger property management companies. Landlords can send a screening request that the applicant can approve or decline. Accepting the request releases credit and criminal records. The MySmartMove website claims that this screening process offers several important benefits for landlords and tenants:

  • The screening process moves more quickly.
  • Landlords have less paperwork to complete. In a competitive rental market, anything that streamlines a landlord’s workload is a perk.
  • Because SmartMove works via “soft” credit inquiries initiated by the consumer, the credit check has no effect on the applicant’s credit score. A poor credit score can mean an extended search for an apartment and lots of background checks, so protecting your score against further hits is important.
  • Some personal information, such as your Social Security number, is not released to landlords.

Visit MySmartMove.com to learn more about what information the TransUnion credit bureau releases and how landlords and renters can use SmartMove for rental background checks.

Here is a general guideline of how scores are broken down, per TransUnion (the credit bureau Credit Sesame works with):