Some good credit news and advice for apartment hunters

This post originally appeared December 28, 2017 on CreditCards.com as “‘How multiple apartment rental credit checks affect your score

By Barry Paperno

Dear Speaking of Credit,
If I need to run multiple credit checks for new apartment rental approval applications, will this affect my credit?

Also, if I get declined by one or two or more complexes before I find one I want, and then get accepted to move in, will the declines from the prior applications affect my credit? – Robert

Dear Robert,
The topic of how inquiries influence credit scores can be an interesting one. Despite inquiries typically making up less than 10 percent of a credit score, they tend to attract a disproportionate amount of attention from consumers, maybe because of the mysterious and nonintuitive nature of inquiries.

Mysterious, since different kinds of inquiries are not always clearly identified on a credit report.

Nonintuitive, because unlike the more obvious measurements of creditworthiness – payment history and how much you owe, for example – it can be hard to see why your score should drop simply because a creditor or landlord checked your credit.

Before addressing your questions concerning score impacts from multiple credit checks and declined rental applications, let’s first sort out some of the differences between the two main types of inquiries – hard and soft – and how each can influence your credit score.

Differences between hard and soft inquiries
Soft inquiries, also known as “soft pulls,” which never have any effect on credit scores, often come from:

  • Creditors periodically pulling credit scores on existing account holders as part of their account management practices.
  • Companies obtaining names and addresses from the credit bureaus to make promotional credit offers to qualified consumers.
  • Consumers accessing their own credit reports and scores.
  • Requests for credit-based insurance scores.
  • Rental property applications.

Hard inquiries, also known as “hard pulls,” which can hurt your score, are most often the result of:

  • Credit card, auto loan, student loan, mortgage and home equity line of credit applications.
  • Follow-up credit evaluations after a promotional credit offer is accepted.
  • Rental property applications.

What kind of inquiry should I expect from apartment rental credit checks?
Notice how rental property applications appear under both categories? That’s because the same rental application can lead to either a hard or soft inquiry, largely depending on how the credit information is accessed from the credit bureau.

Most landlords subscribe to a credit information service designed expressly for their purpose, with some services generating hard and some soft inquiries.

For this reason, and since there’s no other way to know, it’s always a good idea to ask a prospective landlord which kind of inquiry to expect before submitting the rental application. While you’re not likely to have any choice in the matter, you’ll at least have a heads-up as to how your credit score might be impacted.

Multiple credit checks from property rentals count as a single inquiry
While soft inquiries have no effect on any credit score, hard inquiries may or may not affect your score.

When they do, you’ll be happy to know that multiple credit checks from property rentals within any 45-day (FICO) or 14-day (VantageScore) period are treated as a single inquiry by the credit score. The same also holds for multiple mortgage, auto and student loan inquiries. (Sorry, credit card enthusiasts: Each credit card application creates a separate hard inquiry.)

For each inquiry that counts in your score, expect to lose up to five points during the first of the two years these inquiries remain on your credit report.

Credit denials do not affect your score
Whether it’s your rental application that’s been denied or a credit card, mortgage or other type of loan, your credit report will never indicate your request for credit has been declined. And since it’s not in your credit report, it won’t affect your credit score.

A word of caution, however: A prospective landlord viewing multiple recent rental property inquiries could interpret your situation as one of repeated denials by other landlords.

This is why it’s always good to have an explanation prepared should the question arise.

Multiple credit inquiries’ effect on score
It should now be clear that when multiple hard inquiries from a property rental application appear on your credit report, any impacts to your score are likely to be small.

It should also be comforting to know that your credit score is never influenced by a declined application.

Hopefully, some of your worries around how apartment hunting may be hurting your score have now been put to rest. Good luck with your search!

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