The main difference between a soft vs. hard credit check is that each hard check can knock a few points off your credit score, whereas soft checks don’t affect your score. Both hard and soft checks pull the same financial data but for different purposes. Hard checks are typically done when you apply for a loan or credit card; soft checks are conducted for most other purposes, such as pre-screening for credit card offers.
It’s important for consumers to understand this difference because too many hard checks — also known as hard pulls and hard inquiries — can significantly lower your credit score. This in turn can hurt your chances of getting the best offers on credit cards and loans. Keep reading to learn more about credit checks and how to prevent unnecessary hard checks of your credit file.
What Is a Soft Credit Inquiry?
A soft inquiry is when a person or company accesses your credit as part of a background check. They will be able to look at:
• The number and type of all your credit accounts
• Credit card balances
• Loan balances
• Payment history for revolving credit (credit cards and home equity lines of credit)
• Payment history for installment loans (auto loans, mortgages, student loans, and personal loans)
• Accounts gone to collections
• Tax liens and other public records
Soft inquiries are not used during loan or credit card applications, and do not require the consumer’s permission or involvement. Reasons for a soft check can include:
• Employment pre-screening
• Rental applications
• Insurance evaluations
• Pre-screening for financial offers by mail
• Loan prequalification
• Checking your own credit file
• When you’re shopping personal loan interest rates or credit cards
Soft credit checks do not affect your credit score, no matter how often they take place. Some soft checks appear on your credit report, but not all — you may never find out they took place.
When they are listed, you might see language like “inquiries that do not affect your credit rating,” along with the name of the requester and the date of the inquiry. Only the consumer can see soft inquiries on their report; creditors cannot.
Recommended: Does Applying for Credit Cards Hurt Your Credit Score?
What Is a Hard Credit Inquiry?
A hard credit inquiry typically takes place when you apply for credit, such as loans or credit cards, and give permission for the lender or creditor to pull your credit file. As with a soft credit pull, the lender will look at the financial information listed above.
Each hard pull may lower your credit score — but typically by less than five points, according to FICO® Score. All hard inquiries appear on your credit report. While they stay there for about two years, they stop affecting your credit score after 12 months.
Not all loans require a hard credit inquiry — but consider that a red flag. Some small local lenders may offer short-term, high-interest, unsecured personal loans. Borrowers must show proof of income via a recent paycheck, but no credit check is required. The risks of these “payday loans” are so great that many states have outlawed them.
Avoiding Hard Credit Inquiries
Consumers should carefully consider if they really need new credit before applying for an account that requires a hard credit check.
For example, department stores and some chains like to entice you to apply for their store credit card by offering a generous discount on your purchase as you’re checking out. In that situation, ask yourself if it’s worth a credit score hit (albeit a small one).
Another way to minimize hard inquiries is to ask which type of credit check a company intends to run. If, for example, a cable company usually requires a hard credit inquiry to open an account, you might ask if a hard pull can be avoided. Other situations where there may be some flexibility include:
• Rental applications
• Leasing a car
• New utility accounts
• Requesting a higher credit limit on an existing account
Disputing Inaccurate Hard Inquiries
A good financial rule of thumb is to review your credit reports every year to check for common credit report errors and signs of identity theft. You can access your credit reports from the three consumer credit bureaus (Equifax, Experian, and TransUnion) for free at AnnualCreditReport.com.
To check for inaccurate hard inquiries, look for a section on your credit report with any of these labels:
• Credit inquiries
• Hard inquiries
• Regular inquiries
• Requests viewed by others
You can dispute hard inquiries and remove them from your credit reports under certain circumstances: if you didn’t apply for a new credit account, you didn’t give permission for the inquiry, or the inquiry was added by mistake.
That said, under federal law, certain organizations with a “specific, legitimate purpose” can access your credit file without written permission. They include:
• Government agencies, usually in the context of licensing or benefits applications
• Collection agencies
• Insurance companies, when certain restrictions are met
• Entities that have a court order, as in child support hearings
Even so, if you didn’t give permission for a hard credit pull, it’s worth filing a dispute to request that the credit check be removed from your report.
Consumers may dispute hard inquiries online through AnnualCreditReport.com, or by writing to the individual credit reporting agencies.
Hard Credit Checks and Your Credit Scores
As mentioned, hard inquiries appear on your credit report, and each hard pull may lower your credit score by five points or less. Here we’ll go into a bit more detail.
Why Hard Inquiries Matter
Multiple hard inquiries within a short time frame can do significant damage to your credit score. It could potentially be enough to move you from the Good credit range down to the merely Fair. Someone in a Fair credit range can pay substantially more over a lifetime in interest and fees than someone with a Good score or higher.
How Many Points Will a Hard Inquiry Cost You?
As noted above, each hard pull can lower your credit score by less than five points. One or two hard inquiries per year may not matter, especially if you’re not planning on applying for a loan.
If you’re rate shopping for a particular type of loan, such as a mortgage or auto loan, keep in mind that multiple hard credit checks within a specific period (often several weeks) for the same purpose are usually counted as one inquiry by credit scoring companies. However, this is not the case with hard pulls for credit card applications.
How Long Do Inquiries Stay On Your Credit?
Hard inquiries stay on your credit report for two years. While they’re on your credit report, they are visible to anyone who checks your credit. But their impact on your credit score typically lasts less than 12 months.
Soft inquiries may remain on your credit report for one or two years, but only you can see them.
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The Takeaway
Soft credit inquiries do not affect a credit score, while hard credit inquiries may cost you a few points. In both cases, individuals or businesses pull information from your credit reports. Checking your own credit report counts as a soft pull, as do most other situations where the consumer hasn’t given written permission. Hard pulls are typically done only when you’re applying for a loan or new credit account.
Many lenders allow you to “prequalify” for a loan without running a hard credit check. This allows you to shop rates without risking any impact to your credit.
Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.
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Both apartments and condominiums share quite a number of traits but differ in ownership. Apartments are often found in large residential complexes owned by a company. These complexes are often operated by professional property managers. Condos are also usually located in large residential complexes, but each condo unit is typically owned by an individual owner.
If you’re browsing the market for a rental, you’ve likely encountered a dazzling array of condos and apartments, and you might rent either type of property. The question of condo vs. apartment gets more complex if you’re debating whether to buy a condo or rent an apartment.
What Is a Condo?
A condo is a residential unit within a collective living community, where each individual condo is owned by a private owner, but the cost of maintaining communal areas is shared by all owners. While condos are often located in high-rise buildings, they can also take the form of a collection of standalone properties, each designated a “condo unit.”
One benefit to renting a condo is that you can deal directly with your landlord rather than a management office, which may mean more personalized attention for your needs.
For buyers, the purchase price for a condo can be significantly lower than the cost of most single-family homes. 💡 Quick Tip: When house hunting, don’t forget to lock in your home mortgage loan rate so there are no surprises if your offer is accepted.
What Is an Apartment?
An apartment is a rental unit within a building, complex, or community. Often, an apartment complex is managed by a property management company, which serves as both landlord and leasing agent for all of the units on the premises. In big cities, “apartment” is sometimes used as shorthand for a condo or co-op unit. If you’re choosing between a co-op and a condo to rent or buy, you’ll want to know how they differ, and whether you’re ready to buy an apartment.
Rental apartments may be located in high-rises but can also be found in larger homes that have been subdivided into separate units.
Renting an apartment offers greater mobility than buying a property, which makes it a flexible option if you’re only planning on staying in an area for a couple of years. A full-time management office or private landlord takes care of leasing, rent payments, and repairs.
Where They Differ
Now that we’ve covered the condo vs. apartment basics, let’s dive deeper into some key dimensions in where they differ.
Ownership
Each unit in a condo development is usually owned by a private homeowner. Unless the condo owner retains the services of a property manager, prospective renters can expect to deal with the condo owner directly when it comes to rental applications, monthly rent payments, and any maintenance issues that arise over the course of their lease.
Apartments are often managed by a property management company that may also own the apartment complex. Effectively, this makes the company the landlord for the entire property. Prospective apartment tenants will usually submit their application and rent payments through the apartment leasing office, while full-time maintenance staffers are on call to deal with any repairs. Of course, some apartments are in smaller buildings owned by individuals. In that case, a renter might deal directly with the property owner just as a renter in a condo does.
In either case, landlords may be amenable to your desire to negotiate rent in order to take you on or keep you. Paring the rent is the main goal in such a negotiation, but you can always ask for other benefits in lieu of a rent reduction.
Property Taxes
Renters aren’t responsible for paying property taxes, making them a non-issue in the apartment vs. condo choice. However, if you’re deciding whether to purchase a condo, understand that you’re responsible for paying property taxes for your unit every year. If you decide to rent your condo out, you should also expect to be taxed on any rental income you collect.
Design
Regardless of structure type, condo owners retain the right to make cosmetic adjustments to the interior of their properties. So if you’re interested in renting in a particular condo complex and you don’t like the design choices an owner has made, consider looking at other units that are available for rent — you may find a very different look and feel in another unit. Apartments within a rental complex, in contrast, typically share similar, if not identical, layouts and designs regardless of which unit you choose.
Amenities
The amenities of both apartments and condos vary widely and often depend on when and how they were built. Generally speaking, condos are more likely to offer customized amenities, like state-of-the-art appliances and granite countertops, that reflect the tastes and habits of their owners.
Fees
Apartments and condos of similar quality and in the same area should rent for around the same cost. Both condos and apartments often charge the following fees:
• Application fee
• First and last month’s rent
• Security deposit
• Credit and background check fee
• Pet fees and deposit
• Parking fee
Renters may find that condo owners are more willing to negotiate on things like fees than apartment management teams, as these are private owners trying to keep their units rented out for income purposes.
Buying a condo will mean paying monthly maintenance fees that cover insurance for and upkeep of common areas, water and sewer charges, garbage and recycling collection, condo management services, and contributions to a reserve account.
Community
Condos usually have a greater sense of community than apartment complexes, given that their residents are likely to stay around longer. In many cases, residents consist of the condo owners themselves.
By contrast, renters living in apartments often intend to stay for only a couple of years. While that’s not to say that there aren’t occasional resident get-togethers at some apartment complexes, you’re less likely to encounter the same faces over several months.
If you’re renting a condo, expect to abide by rules set by the homeowners association. These can sometimes be fairly strict. Apartments have their own set of rules that may be less stringent.
Renting and Financing
Renting an apartment involves one monthly rent payment, in addition to any utilities you’re responsible for. Of course, when you leave the apartment, you leave with just your security deposit, assuming all payments have been made and no damage has been done.
Financing a condo and purchasing the property allows you to lock in your monthly mortgage payments at a steady long-term rate and gives you the chance to start building equity. In exchange, you’ll be required to make a down payment and be responsible for any taxes, insurance, and maintenance fees, among other costs.
Deciding whether it’s better to buy a condo or to rent — or to get a house or condo — is a complicated decision that depends on your personal finances and your lifestyle. If you’re thinking about settling down, have a stable job with steady income, and have enough saved up for a down payment with an emergency fund to spare, buying a condo or house may be the right choice for you. However, if you’re still exploring the area or have variable income with limited savings, it may be best to continue renting. For those trying to decide between renting an apartment and financing a condo or house, a mortgage help center can help provide answers. 💡 Quick Tip: Your parents or grandparents probably got mortgages for 30 years. But these days, you can get them for 20, 15, or 10 years — and pay less interest over the life of the loan.
Maintenance
Most apartment complexes have an on-site building supervisor who can address maintenance issues. Given that the owner of a large apartment complex oversees all of the units, they’re incentivized to employ someone full time to attend to the day-to-day affairs. This often means that apartment owners can react faster than condo owners, who sometimes don’t even live on the premises.
By contrast, condo units are usually owned by landlords, and most of them hire a third-party contractor to come in and make repairs as necessary. In some cases, condo owners may be handy and handle the repairs on their own.
If you buy a condo, you’ll have a regular maintenance fee that covers the shared parts of the property, but because condo owners typically own just the interior of their unit, any repairs in the condo unit will be separate. (It’s a good idea to pore over the covenants, conditions, and restrictions to see exactly what is part of your unit or part of the common elements.)
Condominium vs Apartment: A Side-by-Side Comparison
To help sum it all up, here’s a quick guide to the condo and apartment traits discussed above.
Condo
Apartment
Ownership
Private owner
Property management company, if a large complex; private owner if a smaller building
Property taxes
Paid by condo owner
Paid by building owner
Design
Customized by owner
Uniform across all units
Fees
First and last month’s rent
Security deposit
Credit and background check
Application fee
First and last month’s rent
Security deposit
Pet fees
Community
Typically condo owners and long-term residents
Typically shorter-term renters
Renting & Financing
Condo renters:
Monthly rent
Utilities
Condo owners:
Mortgage payment
Utilities
Property taxes
Maintenance fees
Property insurance
Monthly rent
Utilities
Renter’s insurance
Maintenance
Private owner hires third-party contractors for repairs and maintenance
On-site maintenance staff
Condo vs Apartment: Which One May Be Right for You?
Whether a condo or apartment is right for you depends on your preferred rental experience. If you’re looking for something that feels a little more akin to home and don’t mind dealing directly with your landlord when discussing repairs and rent payments, a condo (or an apartment in a small privately owned apartment building) may be the better option for you.
On the other hand, if you prefer dealing with a full-time staff of property managers, want something more structured, and don’t mind cookie-cutter corporate apartments, an apartment may be the better rental option for you.
Prospective condo buyers will want to keep their finances and monthly budget in mind when deciding if they want to rent or buy. While the idea of building equity is appealing, settling down and committing to a mortgage isn’t for everyone. You’ll want to thoughtfully evaluate your ability to make monthly payments and whether you want to stick around an area.
The Takeaway
In the condo vs. apartment comparison, you’ll pay similar costs when renting properties of similar quality. Things get more complex if you’re debating whether to buy a condo or rent an apartment, as there are myriad added costs for condo owners in exchange for the chance to build equity.
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FAQ
Why are condos more expensive than apartments?
In general, condos and apartments of comparable quality cost around the same amount to rent. A condo owner, however, will likely face higher monthly costs than an apartment renter, thanks to the added costs that come with owning a property, including mortgage payments, taxes, insurance, and maintenance fees. Over time, the added expense may be offset by the equity built through mortgage payments.
Which retains more value, condos or apartments?
Over the long run, both a condo and an apartment in a co-op building can lose or gain value. Whether your specific property appreciates will depend on local market factors and on upkeep of your unit as well as of the larger complex.
Can I get a loan to buy a condo or co-op apartment?
A qualified buyer can finance a condo with a government-backed or conventional mortgage loan. Getting a loan for buying into a housing cooperative can be more difficult. The buyer is purchasing shares that give them the right to live in the unit — personal property, not real property. That’s one reason that some lenders do not offer financing for co-ops.
Photo credit: iStock/Michael Vi
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Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
During the tenant screening process, landlords often need to sift through tons of applications from potential renters. With so much competition, how do you make yours stand out?
One way is by knowing exactly what essential information to fill out so you can complete the application quickly and correctly. You don’t want to leave anything out and risk your application being delayed or rejected. There are only a few pages to give the landlord a complete picture of you and what you bring to the table as a tenant. You need to show them that you’re a responsible and honest tenant who won’t cause property damage or fall behind on rent. Knowing how to fill out an apartment application to rent an apartment lets you prepare ahead of time. The faster you get your completed, well-rounded application in, the faster you may be in your new home.
Everything you need to include on a rental application
All rental applications are going to look slightly different, from the formatting to how the different sections are organized. But all rental applications should cover the following complete information.
1. Personal and contact information
Typically, the first section on a rental application will be for personal and contact information from the prospective tenant. It’s also an easy section to complete before diving into the rest of the application.
There will likely be a section for the day’s date for you to fill in. Then you can move on the rest of the personal information about the applicant: you.
Your full name
Current address
Phone numbers (include both your home and cell phone number)
Email address
Date of birth
Social Security number
Driver’s license number
If you don’t have a driver’s license, any kind of official, government-issued ID will do.
Other occupants
Most applications give you a section to add the name, age, and contact info for the other people you’ll be living with. But each person who is going on the apartment’s lease needs to fill out their own separate application with their own personal information. If you’re signing the lease with roommates or a partner, you’ll be submitting multiple applications.
This also helps the landlord follow proper health and safety laws and regulations in your area. They can’t have five people living in a one-bedroom apartment. It’s unsafe and against the law.
Know your rights
It’s also important to know what sensitive information a potential landlord legally cannot ask you. During the rental application process and listed on the rental application itself, you cannot be asked about:
Race
National origin
Sex or sexual orientation
Religion
Disabilities
2. Apartment information
Some landlords may include sections or lines for information about the specific rental property or unit. This could include the address, unit number, size of apartment or square footage. But it also may cover monthly rent, upfront costs and pet fees (if applicable).
Oftentimes, the landlord can or will fill in this section themselves to avoid mistakes or errors. After all, they’re the landlord and know all the essential information about the unit. If you do have to fill out this section yourself, just be sure to double-check that all the details are correct. You can also ask the landlord to look it over for verification.
This way, both you and the landlord or property manager are on the same page about exactly which rental property or unit you’re interested in leasing.
3. Employment history
One of the most important sections of how to fill out an apartment application focuses on your employment history. After all, your prospective landlord wants to make sure you can pay the rent on time and in full each month.
In this section, add details about your current employer or work situation. Include information like your job title, work address and how long you’ve worked there. You’ll also want to provide contact information for your employer. Landlords and property managers typically contact employers to verify the employment of a potential applicant.
This section also includes one of the most essential pieces of info for landlords: your income. After all, you need to prove that you have a steady stream of income from some source so you can afford rent. Depending on the application, it may ask for your hourly rate, annual salary or monthly income. It may also ask if you’re part time or full time. As proof of income, you’ll need to provide recent pay stubs or bank statements as part of your application. Requesting two to three months of pay stubs or bank statements is the norm.
If you have a big savings account, you can also provide evidence of this. If you’re between jobs, just started somewhere new or are self-employed with a variable monthly income, having a good nest egg assures landlords. You can also provide more employment history by attaching your work resume. This is only a good idea if your previous work history reflects well on you. If you tend to leave jobs quickly or aren’t on good terms with former employers, it can hurt your case.
It’s also OK if you don’t have a previous employer or just started a new job. There are other ways you can prove you’d be a reliable, trustworthy tenant.
Other sources of income
If you have other sources of income apart from a routine job, you can also give that information to the landlord. Other sources of income can include:
Inheritance
Annuity
Severance payment
Unemployment
Disability
Social security
This can help bolster your claim that you make enough money each month to cover rent.
4. Rental history
Landlords want to ensure that a potential tenant is responsible and reliable. As such, nearly every rental application will have a section where you can fill out your residence history.
You usually only need to provide information about your last one or two rentals, including your current one. Add details about the address, the cost of rent and your move-in and move-out dates.
You’ll also need to list the contact information for current and previous landlords. References from past landlords are one of the best ways landlords vet potential tenants. For that reason, it’s always a good idea to stay on good terms with your previous landlord, because they become potential references once you move out. A good recommendation from a property manager or current landlord who liked you can go a long way. It shows you paid rent on time, took good care of the property and are an upstanding tenant.
If you don’t have any rental history, don’t worry. You can ask a family member or someone you trust to act as co-signer. Some applications may have a brief section where you can indicate if you’re having a co-signer or who they are. Otherwise, mention it to the landlord so they can loop the co-signer in and send them any relevant documents.
5. References
Along with the landlord references, some applications let you provide character references to vouch for you as a person. Professional and personal references from colleagues, friends or co-workers help verify that you’re a reliable person and help the landlord get a good sense of your character. Most landlords won’t accept references from family members. This section should ask for reference names and contact information.
Not every landlord requires or adds this. If they don’t, you can sometimes attach signed letters of reference directly to the application. You can also attach a rental cover letter or renter resume to add a little more depth.
6. Extra details
Not all rental applications will need these extra bits of information, as it depends on the rental property and landlord.
Emergency contact
Just in case, some landlords ask for emergency contact information upfront. If you’re approved, they’ll add it to your file later. It also comes in handy if they can’t get in touch with you during the rental application process.
List an emergency contact’s name, phone number and their relationship to you.
Pets
Lots of renters these days have pets, so you’re likely to see at least one reference to whether or not you have pets on a rental application.
If you do, the landlord usually asks for more background information about the animal such as breed and weight. That way, if they don’t allow the particular animal, they’ll let you know sooner and save you and themselves the trouble.
In addition to knowing how to fill out an apartment application, having a pet resume is a good idea for these situations. Similar to a work resume, it covers all the essential information a landlord would need to know about your pet. Add details like the pet’s name, species, breed, weight and gender. Make sure to include updated vaccine information as well.
Vehicles
If the apartment has on-site parking available and the rental unit has a parking space, you can provide your vehicle information upfront. List the make, model, color and year of each car, in addition to the license plate numbers.
Smoking
Many landlords have strict rules regarding smoking on their properties. If they do, they’ll likely have a small section asking if you smoke or not.
7. Credit and background check permission request
As part of how to fill out an apartment application, landlords need to run a background check and credit check on prospective tenants. There should be a specific section for you to sign, giving the landlord permission to run these checks.
Prior to the credit and background check section, you may also be asked if:
You’ve ever been convicted of a crime
Broken a lease
Declared bankruptcy
Been evicted
These are all potential red flags for renting, but don’t always mean an immediate “no.” Having a heads-up they’ll appear on the background check is helpful. It also shows the landlord that you’re honest about your past.
8. Bank information for the application fee
To cover the costs of running background checks and getting a credit report, most landlords and property managers charge application fees. These fees also cover any administrative costs incurred while processing the application. Within this section, list relevant information such as:
Bank name
Bank address and phone
Bank account number
Credit obligations (loans) with a monthly payment
Some applications will have a list of these fees. That way, you know what to expect.
9. Sign on the dotted line
Rounding out how to fill out an apartment application form is the signature section. Both you and the landlord should sign and date it. The signatures validate the document and serve as proof of payment.
This section wraps up the application. Congratulations, you’re done and have officially applied to a new apartment! Now comes the waiting to see if you beat out the other applicants and are the right tenant the landlord is looking for.
Completing the rental application process
After you’ve filled out rental applications with all the requested information, it’s time for you to sit back and wait to hear if your application has been accepted. During this time, the landlord does their screening reports. The tenant screening can take anywhere from two to three days. Sometimes it takes longer if it’s taking the landlord a while to verify some of your information.
Being accepted to your new apartment
Once you hear the good news that you’ve been accepted, you have a few final steps to follow before hiring movers.
Pay the security deposit and the first month of rent payments
As you finalize the rental process, you’ll need to pay for the security deposit, first month’s rent and any move-in fees.
Generally, writing personal checks is the easiest way to handle this transfer. But increasingly, modern-day renters prefer the ease and convenience of online portals. That way, they can pay rent, review the lease agreement, request maintenance repairs and more in one place.
Sign the lease
Once you’ve reviewed the lease and everything is in order, officially sign the lease to make the apartment yours (temporarily).
A rental application form template
To give you an example of what some apartment applications may look like, check out our sample template. You can also download this PDF or Word document template if you want to practice or get all the information in one place.
Know what to expect when filling out a rental application
Renting a new apartment can be a hassle. But by knowing how to fill out an apartment application, you can prepare in advance to help the process go smoothly and efficiently.
The information contained in this article is for educational purposes only and does not, and is not intended to, constitute legal or financial advice. Readers are encouraged to seek professional legal or financial advice as they may deem it necessary.
In 2020, there were 43 million renters. With a high demand for apartments and houses and limited supply, it is difficult to secure the exact place you want to rent. In a highly competitive rental market, how do you stand out from other renters and snag the perfect place? Write a rental cover letter.
Yes, you read that right! We suggest including a rental cover letter with your rental application to help your application shine compared to other potential tenants. We’ll explain why you should write a rental cover letter and we’ll even include a sample letter that you can use.
Why write a rental cover letter
Typically, you’d include a cover letter with a job application to summarize your past experiences, highlight your best qualities and advocate for why you deserve the job. Well, the same is true for the housing market. Including a rental cover letter can help you stand out from other applicants and leave a lasting impression with the landlord, especially in cities or neighborhoods where there are fewer rental vacancies.
While it’s not required to include a rental cover letter with your rental application, it’s an extra step you can take to show the landlord that you’re serious about wanting to rent from them and provide additional context about who you are and why you’d be a stellar tenant.
Criteria landlords look for
When landlords are sifting through rental applications, there are a few things they look for to help them decide who they should pick. Landlords look at:
Credit history
Employment history
Rental history
Income
References
Background check
Remember — landlords want to rent apartments or houses to someone who will pay the rent on time, keep the property in tip-top condition and be a polite neighbor. All of these things usually go into the rental application itself, but a rental cover letter is an extra opportunity for you to showcase that you’ll be an ideal tenant.
It’s especially important when renting because you’ll likely have your own yard to maintain and be living next to other renters or homeowners that you’ll want to impress.
Things to include in your rental cover letter
So, what exactly should you include in your rental cover letter? Here are a few things to consider including and how they may help you out in your hunt for the perfect place to rent.
Highlight your employment history
Because landlords want to rent to people who have a steady income and will pay the rent on time each month, providing more information about your employment history can help you out. For example, you could share how many years you’ve worked at the same place which will show that you’re a reliable, steadily-employed person.
Share your hobbies
To show a bit of your personality and humanize your application, you could include your hobbies and share what you like to do on the weekends and in your free time in your rental cover letter. This is appealing to landlords who rent houses and apartments because they’ll care about how you’ll interact with the other people in the neighborhood.
Discuss your philosophy on what makes a good neighbor
Everyone wants to live next to good neighbors. In your sample letter, you could include a story about how you’ve connected with neighbors in the past to showcase that you’re the ideal neighbor.
Explain why you want to live in this home and neighborhood
If this is the perfect home for you, share that in the rental cover letter. Share specific examples of why you chose this apartment or house and neighborhood. Those details will show that you truly care.
All of this is optional, but sharing these details will highlight who you are and help personalize your application. It’s also important to remember that under the Fair Housing Act, landlords cannot discriminate based on race, color, national origin, religion, sex, familial status or disability. You do not need to include any of this information in your rental cover letter.
Sample letter to rent a house or apartment
This sample letter is an easy-to-use template that you can use when drafting your own rental cover letter. Simply fill in the blanks and customize as needed.
Download a PDF of the cover letter template Download a Word Doc of the cover letter template
(Your name) (Address) (City, State ZIP Code)
(Date)
(Landlord or property manager name) (Address) (City, State ZIP Code)
Re: (Your name) Renter Cover Letter for (Address or property name)
Dear (Landlord name),
My name is (Your name) and I’m writing to you because I’m very interested in renting the home that’s available at (Address or property name). I was particularly interested in this place because (Reasons you want to rent there).
I currently am a renter at (Current address) but am eager to move because (Reason for wanting to move).
I’m sure you receive several rental applications each day, so I wanted to take some time to help you get to know me a little better and show you why I’m the best applicant for this vacancy.
(Highlight of employment history)
(Rental history highlight)
(Something about your hobbies, passions or interests)
(Note about how you’re a good neighbor and tenant)
(Quote from a reference about your character)
Based on these facts listed above, I think you’ll find that I’m a reliable, good neighbor and tenant who will pay my rent on time, keep the apartment in mint condition and communicate easily with you about any and all needs.
Please feel free to reach out to my references or to me personally with any questions or concerns you may have. I’m eager to rent from you and look forward to your decision.
Finding and securing a place to rent is difficult, so you want all the tips and tricks you can get. By writing a rental cover letter, you’ll be one step ahead of other potential renters and will be one step closer to moving into your new home.
Sage Singleton is a freelance writer with a passion for literature and words. She enjoys writing articles that will inspire, educate and influence readers. She loves that words have the power to create change and make a positive impact in the world. Some of her work has been featured on LendingTree, Venture Beat, Architectural Digest, Porch.com and Homes.com. In her free time, she loves traveling, reading and learning French.
As a landlord or property manager, securing the best possible tenants for your apartment is crucial. You want someone who’s not only going to pay rent in full and on time but will also be a model tenant. No noise complaints, no property damage beyond normal wear and tear, perfect. The screening process to find this ideal tenant all begins with the rental application form. Not only should this document be comprehensive, but also effective in helping you weed out applicants who just won’t fill those perfect tenant shoes.
While there are a lot of templates out there to help you draft a rental application form, you may want to create your own. If you do, make sure these essential elements come together to paint a complete picture of every person interested in renting your property.
Things to include in an apartment rental application form:
Start with the basics
It’s best to get the basic, essential information out of the way first. It’s an easy section to knock out when crafting a rental application form.
Begin this section with the day’s date. This is important because it lets you manage the first-come-first-serve style that most rental applications get reviewed. You can easily keep everyone in order if you have multiple viewings and multiple applications. You may even consider adding a timestamp once an application comes in for further organization.
The rest of the basics are all about the applicant themselves. Each person interested in renting a single apartment should fill out a separate application, so this area should focus on one person only. Include sections for:
Applicant’s full name
Current address
Home phone number, cell phone number and/or work phone number
Date of birth
Social security number
Driver’s license number (or any government-issued ID)
These last three pieces of information are necessary to run a background check on the applicant. You can explain that to them as they’re filling the form out if there’s concern about sharing this type of information upfront.
Include apartment information
Also within this section, or immediately above or below it, you’ll want to include a few bits of key information about the rental property. You want to add not just the address and unit number, but also details on fees and rent. Provide a space to write in monthly rent, security deposit fee, upfront costs and pet fees (if applicable.)
You can also insert the date the unit will become available or even allow the prospective tenant to fill in their estimated move-in date.
Putting this information here means no surprises for whichever applicant you decide to rent the apartment to. The information on the lease will match what they have here.
Dive into their employment history
The next section should focus on employment. Hopefully, your applicant is currently working somewhere, or at least can confirm a steady stream of income from some source. How else will they afford rent, right? You’ll collect information on their finances in more detail later on, but for now, establishing a work history and monthly income gives you a good snapshot.
In this section, you’ll want to ask for:
Name and address of current employer
Supervisor’s name and phone number
Applicant’s job title
Start date
Monthly income (after taxes)
Get all this information for their current position and ask for it all for their previous employer, as well. Just go one job back to establish a history of employment. It’s also OK if the applicant doesn’t have a previous employer. A first-time renter hasn’t had time to establish a job history, or they worked for the same company for a long period of time. You can look at each individual application to decide whether only having a single, current employer is OK with you.
Other sources of income
It’s also best to leave a space where the applicant can note other sources of income. You don’t need totals at this point, but it’s good to know what to research when doing a credit check. Other sources of income can include:
Inheritance
Annuity
Severance payment
Unemployment
Disability
Social security
A complete list of what types of additional income the applicant has coming in is helpful for you to total up whether they make enough to afford rent.
Gather rental history
Equally important to their finances is the applicant’s rental history. You want to know about their current and past landlord or property manager. You also want to know if they have any evictions on their record.
Collect the name and contact information from the current and previous landlord or property manager in addition to the monthly rent they paid/are paying, the date they moved in and the date they moved/are moving out.
Sometimes, the best resource to learn about a prospective tenant is to talk with other landlords or property managers who they’ve rented from before. You’ll get the inside scoop.
Ask for references
While it’s not a necessary section on your rental application, it’s a good idea to put in one asking for personal references. Your applicant can share names of friends, family or professional contacts that can vouch for their character.
This section should ask for reference names and contact information, although you can also allow your applicant to attach signed letters of reference directly to the application. You can also allow prospective renters to attach a rental cover letter or renter resume to add a little more depth to their application. If you decide to do this, add a note to the reference section that you’ll accept supplementary material.
Get a few extra details
Not all rental situations will need these extra bits of information, so you don’t have to include these sections in your rental application form if they’re not relevant, but it’s good to consider them.
Emergency contact
Having an emergency contact on file for your tenants is never a bad thing. While you don’t really need it this early in the process, it’s easy to work the question in here so it goes into the applicant’s file.
Ask for an emergency contact’s name, phone number and relationship to the tenant.
Other occupants
To make it easier to batch review applications, you should have people list any other occupants who will live in the apartment. This includes roommates and partners. This way, you can double-check you have applications for everyone.
Pets
If you have a property that allows pets, you’ll want to collect this information early. If you have any breed restrictions or limits on the number of pets, you can weed out applicants who don’t fit the bill.
Ask for pet type, breed, weight and age. Leave enough blanks for the total number of pets you allow, as well.
Vehicles
If your apartment has on-site parking available with the unit, you’ll want to know what vehicles will get parked on the premises. Ask for the make, model, color and year of each car, in addition to the license plate numbers.
Request permission for a credit and background check
This part of the application gets you to the next step in the screening process. Here, you’ll need to ask the applicant to give you permission to look up their personal information to run both a credit check and a background check.
Within this section, you can also collect relevant information such as:
Bank name
Bank address and phone
Checking account number
Credit obligations (loans) with a monthly payment
To get ahead of running these checks, also ask whether the tenant has ever:
Been convicted of a crime
Broken a lease
Declared bankruptcy
Been evicted
These are all potential red flags for renting, but don’t always mean an immediate “no.” Having a heads-up they’ll appear on the background check you’ll run is helpful. It also shows you this applicant is being honest about their past.
Sign on the dotted line
Rounding out any rental application form is the signature section. Start the section with a list of fees associated with completing the form and then both you and the applicant should sign and date it. The signatures will validate the document, but also serve as proof you’ve received the accompanying fee.
The application fee should cover specific costs — those of running both the credit and background check, as well as any administrative costs you’ll incur processing the application. This is not a way for you to make a profit on someone’s interest in the apartment for rent.
This section wraps up the application and confirms the applicant’s interest in the apartment. Now you can dig deeper to find out if they’re the right tenant for you.
A rental application form template
Just in case you want a ready-made rental application template, we’ve got you covered. Simply download our PDF or download our word document template and make edits as you need. Anything in italics is an optional section that might not apply to your property.
Are enough rental applications coming?
Now that you’ve got the right rental application form ready to go, the next thing to do is draw in prospective tenants. Make sure you’re finding the best potentials by listing your property in the right location. Go where the renters are looking!
By listing your property on Rent. you get access to in-market renters along with helpful reports to expedite your screening process.
The information contained in this article is for educational purposes only and does not, and is not intended to, constitute legal or financial advice. Readers are encouraged to seek professional legal or financial advice as they may deem it necessary.
The average American net worth varies due to many factors, with some people making far more than others. If you’re behind the national average, it may seem difficult to catch up, but whether you have bad credit or a lot of debt, you can still begin building your net worth by learning how to generate passive income.
Passive income is a great way to generate more income, pay down your debt, and start saving and investing for your future. Here you’ll learn what passive income is, as well as different ways to make passive income online and offline. With 25 passive income ideas, there is something for everyone.
25 Passive Income Ideas:
Write an E-Book
Start a YouTube Channel
Try Affiliate Marketing
Create a Blog
Sell Stock Photos and Videos
Create an Online Course
Make Sponsored Content
Invest in Dividend Stocks
Invest in REITs
Invest in Index Funds and ETFs
Try Peer-to-Peer Lending
Stake Cryptocurrency
Utilize High-Yield Savings Accounts
Buy Government Bonds
Invest in Art
Buy Property to Rent
Rent Out a Room in Your Home
Buy Domain Names
License Your Music
Design Custom Products
Rent Out Your Vehicle
Use Your Vehicle as Ad Space
Create an App
Flip Unique Items
Rent Out Your Parking Space
What Is Passive Income?
Passive income is a type of income that comes from sources other than your regular employment, and involves a more hands-off approach. Passive income isn’t a “get rich quick” scheme, though some companies make big claims about generating passive income without any work. Passive income does take work to set up, but the goal is that you can make money without managing it on a day-to-day basis.
You’ll generally do most of the work by setting up your source of passive income. While it may require some upkeep every now and then, like updating a product or maintaining a rental property, you’ll earn the majority of your income while pursuing other endeavors.
Like other sources of additional income, passive income is taxable, but when done correctly, you can make enough passive income to surpass your tax bill.
1. Write an E-Book
Whether you’re a writer or not, an e-book can be a fantastic way to generate passive income. We no longer live in a world where publishers are the gatekeepers of books, so you can self-publish a book that can generate passive income. Various websites let you self-publish books, like Amazon’s Kindle Direct Publishing, Apple Books, and Barnes & Noble. Some of these sites also offer print-on-demand services for customers who want physical copies.
You can write a nonfiction book if you’re knowledgeable about a certain subject, or you can write fiction if you have an interesting story idea. Although this can generate passive income, self-publishing can require a bit of an investment. You’ll need to pay for an editor and book cover designer, and you may also want to pay for advertisements. But if you can do the cover art and marketing on your own, you may be able to save some money.
2. Start a YouTube Channel
There are many ways to make money using social media, but YouTube is one of the best ways to make passive income. YouTube pays content creators to run ads on their videos. In order to qualify for the YouTube Partner Program, you’ll need at least 500 subscribers, three new videos within the last 90 days, and 3,000 watch hours within the last year. Previously, you needed 1,000 subscribers and 4,000 watch hours, but the policy was updated in June 2023 with lower requirements.
Like other sources of passive income, making money from YouTube will require an up-front investment of time and money. You need a stable internet connection, camera, microphone, computer, and editing software. You also need to make consistent videos to qualify for the partner program. You can eventually generate passive income by making evergreen videos, because people will watch old videos that bring in revenue—and the more videos you have on your channel, the more money you can make.
3. Try Affiliate Marketing
Affiliate marketing is when you share a link to a product or service, and the company gives you a percentage of any sales made through that link. You can share these links on your social media pages, blog, newsletter, or anywhere else that allows you to post a link. Affiliate marketing is one of the best online passive income opportunities, and you can combine it with any other online method we mention in this article.
One of the most popular affiliate link programs is Amazon Associates. Let’s say you have a YouTube channel where you review electronics, and you make a video reviewing a new TV or laptop. If you link to that product on Amazon with your affiliate link, you’ll receive a percentage of the sale each time someone uses your link.
This isn’t only limited to Amazon, either. Many companies offer affiliate links, so it can be advantageous to reach out to companies for products and services you use regularly to see if they have an affiliate program.
4. Create a Blog
There are a variety of ways to make money from writing a blog. Like YouTube, old blog posts can generate passive income even if people read the post months or years after you wrote it. If you create your own website to host your blog, you can integrate Google Ads and use affiliate links to make money online.
Platforms like Substack combine blogs and newsletters, so every time you write a new post, subscribers receive an email. You can have paid subscriptions on Substack, so users pay a monthly fee to read your posts, and you can have free posts that go out to non-paying subscribers as well.
5. Sell Stock Photos and Videos
If you’re a photographer or videographer, you can earn money for your photos and videos. There are many different websites that buy stock photos and videos, like Shutterstock, iStock, and Getty Images. One thing to consider is that the website gets exclusive rights to your images or videos, but on some sites you can make between 15% and 45% in royalties.
6. Create an Online Course
Many people have expertise in a certain area, and utilizing your knowledge and skills to create an online course is a great way to make passive income online. For example, you can create a course for how to knit, how to take amazing photos, or how to program an app. Websites like Kajabi and Teachable allow you to host and sell your courses.
You may need to invest some time and possibly money in marketing your course to ensure you find the right audience. Some course-hosting platforms like Skillshare also categorize courses by topic for better discoverability.
If you start gaining a following on social media platforms or through a blog, you may get the opportunity to do sponsored content. Companies want to ensure they target the right audience, so if you have followers who may buy their product or service, they’re more likely to sponsor a piece of content. This typically means you discuss their product in a video or write about it in a caption.
In order to generate passive income from a sponsored opportunity, the company will give you an affiliate link. This allows you to make money up front for the sponsored content as well as passive income from anyone who uses your link to buy the product or service.
This route for passive income may take some time because companies typically want people to have a decent following before sponsoring content.
8. Invest in Dividend Stocks
Stocks can be a great way to make money while also investing in your future. When you buy a stock, you buy a small portion of a company. If the stock price rises and you sell it at a higher price, you make a profit, but the stock can also drop in price and lose you money. Some, but not all, stocks offer dividends, which pay investors a dividend per share if the company has a profitable quarter.
When the stock pays out dividends, you can receive the payment directly from your brokerage or reinvest the dividends by buying more of the stock. Like other investments, this can compound and turn into a lot of money over time if the company continues to profit. As you invest in dividend stocks, keep in mind the companies can raise or lower the dividend percentage at any time.
Use MarketBeat’s dividend calculator to look up specific stocks and estimate dividend returns.
9. Invest in REITs
Real estate investment trusts (REITs) are another investment opportunity. Rather than investing directly in a property, you can invest in a REIT, which is a company that owns and manages real estate.
Similar to other investments, there is risk that comes along with investing in REITs. For example, there’s a possibility your REIT investments will lose money if there’s a drop in the housing market.
10. Invest in Index Funds and ETFs
Index funds and exchange-traded funds (ETFs) are some of the safest investments because they offer diversification. Rather than investing in one company, index funds and ETFs allow you to invest in multiple companies simultaneously.
Legendary investor and founder of Vanguard John Bogle was a major advocate for index fund investing. More specifically, he advised people to invest in the S&P 500, an index of the 500 largest companies in the United States. ETFs are slightly different because there are higher fees, but they allow you to invest in a group of stocks for a specific industry. For example, ARKK is an ETF that holds shares for companies that work on innovative technology.
There is still a risk when investing in index funds and ETFs, but they are often lower risk than other forms of stock investing.
11. Try Peer-to-Peer Lending
Another way to make passive income is to become your own type of “bank” by doing peer-to-peer lending, sometimes called P2P lending. Banks make money on loans by charging interest to customers, and P2P lending allows you to do the same thing. Websites like Prosper and Funding Circle allow everyday people to lend and borrow money with various interest rates.
12. Stake Cryptocurrency
Cryptocurrency investing is a highly volatile form of investing, making it especially high risk. Some cryptocurrency platforms allow you to “stake” your crypto, which is when you allow the platform to hold your crypto and lend it to other people. Similar to P2P lending, you make money off the interest.
Cryptocurrency lending and trading is also high risk because there is little to no regulation. Crypto platforms like Voyager have been known to offer extremely high returns and then go bankrupt, preventing them from paying back their users. In extreme cases, there are stories of fraudulent activity from crypto platforms. But if you have a high risk tolerance, this form of investing can be incredibly lucrative.
13. Utilize High-Yield Savings Accounts
A safer way to make passive income is to open up a high-yield savings account, which allows you to make money simply by holding it in your account. Banks use customer funds to lend out money, but unlike crypto staking, bank funds are backed by the U.S. government via the FDIC. This means that if, for some reason the bank doesn’t have the money when you want your funds, the government would provide the bank with the money to pay you up to $250,000.
Many banks and financial institutions offer high-yield savings accounts, with some offering an annual percentage yield (APY) of over 4%. So if you opened an account with a 4.5% APY and deposited $1,000, you would have $1,045 after a year.
People maximize their passive income by not touching this money because it compounds each year. So using that same example, in the second year, you would then earn 4.5% of the $1,045 rather than the original $1,000. And if you add to the savings account each month, you can make quite a bit of money over time.
14. Buy Government Bonds
Perhaps the safest way to earn passive income from investing is to buy government bonds. A government bond is basically a loan to the federal government that pays you back the original amount with interest over a certain period. The reason government bonds are so safe is because the government backs them. When buying a stock, it’s possible to lose your money if the company goes out of business. Bonds are safer because as long as the government exists, you’ll make your money back.
Although government bonds are very low risk, they also offer low returns. Depending on various factors, government bonds may offer a 3–5% return over two to 30 years. To put that into perspective, S&P 500 index fund investing offers an average return rate of over 7.5%[1] .
15. Invest in Art
Similar to stocks, you can also invest in artwork. One way to do this is to buy works of art that you believe will increase in value later. If you’re knowledgeable about art and can find pieces selling for below their value that you can sell later for a profit, you can make a bit of money. Websites like Masterworks allow you to buy shares of artwork with other investors so you take on less risk.
16. Buy Property to Rent
Many people generate passive income by purchasing properties to rent. If you can afford the initial investment of buying a single-family home or condo, you can then rent them out to tenants for a profit. For example, if you buy a house and your mortgage is only $1,000, you can make a profit by charging any amount over your mortgage cost.
In order to take advantage of the passive income aspect of renting, you may benefit from hiring an individual or company to manage the property. Property managers collect the monthly rent and take care of maintenance issues for a fee. Should you decide to invest in rental properties, it’s helpful to factor in the cost of potential home repairs before, during, and after tenants live there.
17. Rent Out a Room in Your Home
If you don’t have the money for a down payment or don’t want to take on the risk of purchasing a rental home, you can always make some extra income by renting out a room. If you have a spare room in your home, you can rent it out for a monthly fee. This is a great option for families whose children recently moved out.
You can use websites like Airbnb and VRBO to connect you with renters. Although many people use Airbnb for short-term rentals during vacations, you can also offer long-term rentals through the website. These sites also let you vet renters before they move in, so you have control over who rents the room.
18. Buy Domain Names
Buying domain names is a sort of investing, so it does come with some risk. People and businesses buy domain names to host their websites, so you can purchase a variety of inexpensive domain names in hopes of people buying them from you later for more. You can typically buy domain names for less than $10 through websites like GoDaddy, but if they don’t sell, you’ll need to pay the annual cost to keep the name.
While this may be a risky investment, people have made a lot of money flipping domain names. It was a big money-maker during the “dot com boom” in the 1990s, Help.com sold for $3 million and NFTs.com sold for $15 million in 2023. Many domains don’t sell for millions, but you may still be able to make a decent profit off domain names in high demand.
19. License Your Music
If you’re a musician, you can license your music in a similar way to selling stock photos and videos. Some websites like Music Vine pay musicians 30% for nonexclusive deals or more for an exclusive license. There are also websites like Epidemic Sound that market to YouTubers and filmmakers by offering a subscription service for royalty-free music.
20. Design Custom Products
For those who are artistically inclined, you can make money creating designs and selling them on websites that sell custom products. Websites like Redbubble, Teespring, and Society6 offer print-on-demand services for your artwork. These websites sell a wide range of products like T-shirts, coffee mugs, phone cases, and more. You get a percentage of the sale every time a customer goes to the website and chooses your design for any of these products
If you have old artwork you created in the past or simply feel like creating in your spare time, you can generate passive income as long as your art is hosted on these types of websites.
21. Rent Out Your Vehicle
Services like Uber and Lyft are popular side hustles, but you can make passive income by renting out your vehicle instead. When people are traveling or have their car in the repair shop, they often need a vehicle to get around. Rather than going to a rental car company, they can rent a vehicle through other websites like Turo or Getaround.
22. Use Your Vehicle as Ad Space
In addition to renting out your vehicle, you can make passive income by using your vehicle as ad space.
Websites like Wrapify connect businesses and drivers, and depending on how much of your car you’re willing to cover with ads, Wrapify will pay you between $181 and $452 per month. There are also sites like FreeCarMedia.com that pay you for wrapping your vehicle or simply advertising on your rear window.
23. Create an App
If you’re a programmer who can create an app, this may be the best way for you to make passive income. Whether it’s a fun game or an app that provides value and convenience, use your creativity and skills to generate income. Apple and Google allow developers to submit their apps, giving you a percentage of the sale each time someone buys the app.
24. Flip Unique Items
One of the oldest ways to generate passive income is to buy unique items, hold them, and sell them at a later date for a profit. If you’re knowledgeable about a certain type of item or are willing to learn, you can make a decent amount of money by buying and holding items.
This is ideal for people who like shopping at thrift stores or going to garage sales. You may find antique toys, memorabilia, sports trading cards, comic books, or other items for a low price that are either worth a lot of money now or will be in the future.
To sell the items or see how much items are selling for, you can use websites like eBay, OfferUp, Craigslist, or Facebook Marketplace.
25. Rent Out Your Parking Space
Some people are willing to pay for a good parking spot. If you have a space you’re not using or don’t mind giving up, you can make money renting it out—especially if you live in an urban area. Websites like SpotHero allow you to list your space.
What’s the Best Source of Passive Income?
The best source of passive income is unique to each individual. There are many options on this list, and some allow you to capitalize on different skill sets. For example, if you have expertise in certain subjects, the best sources of passive income may be online courses and e-books. If you have knowledge about stocks or are willing to learn, investing may be the best option.
When deciding which passive income sources are right for you, it may be beneficial to weigh out the pros, cons, and risks of each one. Remember that many of these options require an initial investment of money and time to get started. Consider your own risk tolerance and financial situation before going all in on any of these methods.
Do You Need Money to Make Passive Income?
While you’ll need money to get started with many passive income ideas, this isn’t the case for every method. For example, if you own a vehicle or have an extra room in your home, you can start renting them out. If you have a computer and internet connection, you have even more options.
Many people who make passive income succeed because they are willing to learn and can invest time into researching these topics. There’s a wealth of information online where you can learn how to excel at specific passive income opportunities like writing an e-book, succeeding as a YouTuber, or using affiliate links.
The Benefits of Multiple Streams of Income
Depending on your specific situation, you may want more than one source of passive income. Whether you’re already in a healthy financial situation or are trying to build your personal wealth and credit score, more income streams means more financial freedom.
The primary benefit of passive income is that you can make money with minimal effort. This means once you get one source of passive income rolling, you can begin adding others so you have multiple income streams that don’t require too much time or attention.
How Passive Income Can Help Improve Your Credit Score
A poor credit score can lead to many challenges—like making it difficult to get approved for new lines of credit, loans, and rental applications—and cost you a lot of money in interest in the long run. Passive income can help you fix your credit by allowing you to pay off your debts. Lenders also look at your total income, so making additional income can help with approvals for new lines of credit, which can also help improve your score. It’s important to know the current state of your credit health. You can get a free credit report card on Credit.com which breaks down your credit score factors and assigns a letter grade for each area, or sign up for our ExtraCredit® subscription for additional credit tools.
You can get an apartment with bad credit, but it may take some strategizing. Apartment applicants with low credit scores can boost their odds by applying with a cosigner, paying more upfront, offering references, or changing the type of units they apply to.
In today’s housing market, you want every possible advantage on a rental application. While letters of recommendation and a solid rental history will get you far, more and more landlords want a high credit score. As a result, it isn’t uncommon to ask if you can get an apartment with bad credit.
While it takes some strategizing, you can get an apartment with low credit. To help you along, we’ll explain how credit impacts your application, explain steps you can take to compensate for low credit, and share tips on boosting your score.
How Credit Impacts Getting Approved for an Apartment
Many landlords and renters run a credit check as part of their rental application process. Like lenders, landlords check your credit to see if you can pay your bills on time. Because renting is an investment, property owners want to minimize risk. So, they assume tenants with high credit are more likely to pay their bills on time.
Remember that your credit score isn’t the only factor on a rental application. While a high score helps, the details on your credit report matter, too. How you got a high or low score can sway property managers one way or the other.
What Credit Score Do You Need to Rent an Apartment?
The score you need depends on the unit. Some rental companies provide an ideal range for their listings. A score of 620 or higher will generally keep landlords from denying your rental application. However, some landlords will expect more, while others don’t look at your score at all.
What Do Landlords Look for on a Credit Report?
Renters may treat your credit score like a headline, but there’s more to a credit report than a number. Credit reports tell a story about your spending habits and income. To help landlords pick reliable tenants, a rental credit check includes:
Rental history: Some landlords report rent payments to credit bureaus. As a result, evictions, broken leases, and late or missing payments may appear.
Employment history: Current or past employers may show up on a credit report. Typically, they only appear if you listed them on a credit card application or loan.
Payment history: Credit reports show your history of payments to lenders. Late or missing payments will lower your score and work against your rental application.
Debts: Current and past debts show up on your credit report. By providing payslips, landlords can calculate your debt-to-income ratio. If you make enough to repay your debts responsibly, that improves your application.
Delinquent or collections accounts: An account is delinquent if you miss a payment due date. If you miss enough payments for lenders to transfer your account to a collection agency or sell it to a debt buyer, it becomes a collections account. Both of these hurt your credit score.
Bankruptcy status: Bankruptcy filings will affect your credit score. Landlords may take recent bankruptcies as a sign that you’re a high-risk tenant.
Derogatory remarks: These remarks refer to negative items on your credit report. They include auto repossessions or foreclosures. They hurt your score and hamper a rental application.
Landlords gauge the risk they pose by looking at how applicants spend their money. Someone with a high income but a history of late payments may not make the cut. On the other hand, someone who filed for bankruptcy years ago may be more responsible now.
How to Get an Apartment with Bad Credit
While a low score sets you back, you can learn how to get approved for an apartment with low credit. By following these methods, you can get a leg up in rental applications:
Make an Upfront Payment
Putting down more money upfront can give you an edge on rental applications. Landlords will usually request a security deposit or the first and last month’s rent upfront. To sway a landlord’s opinion, offer the first three months’ rent or put down a higher security deposit.
At the end of the day, renting is an investment. If you can show your landlord that you’ll give them a reliable ROI, it’s all the more likely they’ll accept you. As a bonus, paying more in advance saves you a financial burden for the next few months.
Find a Guarantor or Cosigner for Your Apartment
If a landlord can’t trust you to make payments, you can get someone to sign your lease with you. Someone with a great credit score who signs on with you can assuage a property manager’s worries. However, remember that the person who helps you takes on financial risk. You have two options for this approach:
Cosignerssign a rental agreement with you and share the financial responsibility for it. They must do so on your behalf if you can’t or won’t pay rent.
Guarantors share cosigners’ responsibilities, but they have fewer rights. More specifically, they vouch for you and can make payments on your behalf. However, they aren’t entitled to reside in your unit.
Offer References and Supporting Documents
While credit reports outline your financial history, you aren’t the sum of your spending decisions. You can offer other documents to show your responsibility in an apartment application. Additionally, these documents can prove you can pay rent each month. Some examples of supporting documents include:
Payslips: Offer pay stubs that show you make enough money to pay rent each month.
Letters of recommendation: Reference letters from a friend or employer can attest to your character and responsibility.
Proof of reliable rental history: Account statements and landlord testimonials can prove you always pay rent on time.
A snapshot of your savings account: If all else fails, you can show landlords you have the money to make rent. Be sure to censor sensitive information on your snapshot.
Utility payments: A history of on-time utility payments shows your trustworthiness.
Find Apartments to Rent with No Credit Check
While credit checks are common, not all landlords require one. While these properties aren’t the most competitive, that isn’t always a problem. Apartments with no credit check tend to cost less than ones with one.
If you’re looking for another option, some landlords advertise units with low credit requirements. Again, these properties set a low credit requirement for a reason. That said, if you inspect the unit and it looks good, this route can save you a headache. As you live in low-credit apartments, you can build your score for future applications.
Adjust Your Expectations
If you can’t get around a credit check, reassess the kinds of apartments you can apply for. This isn’t to say you should only apply to units in poor condition. Instead, consider what you’re willing to compromise on. You may have an easier time qualifying for an apartment:
Farther away from your work or downtown area
Without amenities like a gym or pool
That doesn’t include parking
With less square footage than you’d prefer
If you apply with a roommate
Bear in mind that compromising on these points means the apartment may cost less. While living in a less-than-ideal unit, you can save and rebuild your credit while renting. When it comes time to look for a new apartment, you’ll have better odds of getting the one you want.
Tips to Raise Your Credit Before Renting an Apartment
If you plan to send rental applications down the line, you should work to improve your credit. Bear in mind that increasing your credit score takes time. To see a major change, expect months or even a year of work. In that time, follow these tips to improve your credit:
Pay Your Bills on Time
A person’s payment history can make or break their credit score. Central to that payment history: whether you paid your bills on time. Making timely and consistent payments plays a big role in improving your credit score. On top of that, timely payments prove your reliability to a landlord, boosting your chance of getting approved.
Pay Down Any Debt
Paying down debts is one of the best ways to improve your credit score. For this reason, someone who takes on and pays off debt won’t get punished for the debt they take on. Paying off debts shows your fiscal responsibility and proves your finances are on an upward trajectory.
Paying off any kind of debt can improve your score. The main ones to look out for include:
Credit card debt
Student loans
Medical debt
Auto loans
Become an Authorized User for Credit Piggybacking
If you don’t have the resources to boost your credit alone, you can try credit piggybacking. Credit piggybacking lets you benefit from a friend or family member who pays down their debts. By becoming an authorized user on their account, your credit report reflects their payoffs.
You can break the process into a few steps:
Find a friend or family member you trust to spend responsibly.
Become an authorized user on one of their credit cards or lines of credit.
As they pay down their debts, this will show up on your credit report.
By piggybacking on their credit payoffs, your score will improve.
Dispute Credit Report Errors
Sometimes, a low credit score isn’t your fault. Credit reporting errors can come from major credit reporting agencies or the companies giving them information. Credit reporting errors aren’t uncommon, so you should review your report for issues.
Credit reports may contain errors related to:
Accounts held by another person with a similar name to you
Accounts opened by fraudsters who committed identity theft
Closed accounts that still read as open
Accounts incorrectly labeled as delinquent or in collections
Payments that don’t get reflected in your report
Multiple listings of the same debt
Accounts with inaccurate balances or credit limits
To dispute credit report errors, contact the credit bureaus and the company that reported inaccurate information to them. You want to provide supporting documentation that proves the report contains errors. While you can send a dispute by phone, this doesn’t leave a paper trail. Instead, mail a dispute letter or use an online form.
FAQs on Renting an Apartment with Bad Credit
You may still have questions about getting approved for an apartment. To help you out, we’ve answered FAQs on renting apartments with bad credit.
Is 500 a High Enough Credit Score for an Apartment?
You can rent an apartment with a credit score of 500. While it might take you out of the running for expensive units, you should still have a good chance of renting:
Apartments with low credit requirements
Apartments with no credit requirements
Apartments you apply to with a cosigner or roommate.
Can I Reapply for an Apartment After I Get Denied for Bad Credit?
You can apply for the same apartment after getting denied on your first attempt. That said, some renters may throw out your application or ignore it. If you reapply, try to improve your credit and finances between applications.
Do Landlords Need Permission to Run a Credit Check?
Landlords need your permission to run a credit check. The Fair Credit Reporting Act calls rental applications a “permissible purpose.” This gives them the right to view your credit. However, that doesn’t mean landlords can check your score without your consent.
Improve Your Credit for an Apartment with Credit.com
Managing apartment applications is hard enough, even without a low credit score. However, you can get an apartment with bad credit by following the right steps. You’ll see more housing opportunities by learning how credit works, reviewing strategies for getting an apartment with low credit, and following tips to boost your score.
If you’d like a way to streamline raising your credit for rental applications, Credit.com can help. Our rent and utility reporting services ensure that your on-time payment gets reflected on your report. Even if your landlord doesn’t report payments, our tool helps build your credit with every rent payment reported.
[Editor’s note: This is an excerpt from the conclusions from the category product review series for the small landlord property management software sector. It answers two of the questions posed in the introduction. Originally published in the Geek Estate Mastermind.]
How are property management software companies impacting the small landlord business model?
Vendors are making it easier to start or continue operating as a DIY. Certainly, a trusted partner to handle the payments, screening, and marketing makes grokking the operation of a rental more feasible for newbies and part-timers. A small monthly vendor fee (or free) is replacing the model of paying 5-10% of monthly rent for a full suite of services. The time to money trade-off is worth it for many.
Are online rental applications becoming mainstream or are they still mostly on paper?
It depends on the definition of “mainstream.” Digital signatures for documents of all types is still growing in demand. Search inquiries for rental applications continue to increase year over year, according to Avail. Thousands of landlords will screen their tenants online this year. Online rental applications are becoming the only way forward as both demand and adoption increase rapidly.
[Editor’s note: This is an excerpt from the conclusions from the category product review series for the small landlord property management software sector. It answers two of the questions posed in the introduction. Originally published in the Geek Estate Mastermind.]
How are property management software companies impacting the small landlord business model?
Vendors are making it easier to start or continue operating as a DIY. Certainly, a trusted partner to handle the payments, screening, and marketing makes grokking the operation of a rental more feasible for newbies and part-timers. A small monthly vendor fee (or free) is replacing the model of paying 5-10% of monthly rent for a full suite of services. The time to money trade-off is worth it for many.
Are online rental applications becoming mainstream or are they still mostly on paper?
It depends on the definition of “mainstream.” Digital signatures for documents of all types is still growing in demand. Search inquiries for rental applications continue to increase year over year, according to Avail. Thousands of landlords will screen their tenants online this year. Online rental applications are becoming the only way forward as both demand and adoption increase rapidly.
Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations.
Can you pay a loan with a credit card? Yes, paying a loan with a credit card is sometimes possible. Yet, whether or not you can do so depends on factors such as the lender’s policies or the type of loan you want to pay off.
Good credit can open doors, but bad credit can keep them shut. In fact, research shows one in 10 Americans were denied work because of poor credit history! Good credit is important because it tells lenders you’re not a risk and that you pay loans on time. A good score can help you get approved for mortgages, financing, loans, and credit cards. Bad credit leads to more fees, higher interest rates, and rejected applications.
Aside from securing loans, your credit can impact your ability to secure housing and even employment. Understanding your credit score can help you make more informed decisions. We’ll explore how credit works, why it’s important, and how to maintain a good credit score.
What Is Credit?
We often hear people saythat it’s important to build credit. But what is credit? When you pay for something “on credit,”you’re actually borrowing money to make the purchase, which you pay back later. But when people say “your credit,” they’re usually talking about a credit score.
Your credit score is a three-digit number calculated by FICO®, VantageScore, or other scoring models. Your score indicates how well you manage credit. Institutions and agencies use this score to determine risk, such as how likely you are to repay loans on time. A credit score of 670 or higher is considered good by most standards.
Why Is Credit Important?
Good credit is important because it helps you secure loans, mortgages, rentals, and other important financial goals. Financial institutions perform a credit check before approving applications, and use your credit history to determine available options, associated fees, and interest rates.
Credit can impact our daily lives in many ways. Potential lenders, landlords, and employers might reject your application if you have bad credit. But good credit can help you get approved for loans and save money.
There are many benefits to a good credit score. You’ll need a strong credit score for things like:
Loan applications: Lenders assess your credit to determine how likely you are to repay a loan. People with poor credit may face higher interest rates, smaller loans, or rejection.
Credit card applications: Banks and credit card companies need to look at your credit report before you can get a credit card. With good credit, you can get lower interest rates and higher limits.
Mortgage applications: Your credit score will determine monthly payments and interest rates. Good credit is essential if you can’t afford a large down payment.
Rental applications: Landlords can run a credit check or ask you to provide one. Credit score won’t impact the rental costs, but a landlord can reject an application due to poor credit.
Job applications: Prospective employers can ask for credit checks, especially if you are dealing with sensitive information. You may need a credit check for jobs in accounting, sales, the military, and other industries.
Insurance applications: Depending on where you live, you might need a credit check for insurance. Not all states allow insurance companies to access your credit information.
Vehicle rentals: You might need a credit check for vehicle rentals if you don’t pay with a credit card. And depending on your state and the company, your credit may impact your rental options.
Credit card benefits: Good credit can help you secure credit cards with benefits, including airline miles, travel credits, cashback rewards, and other perks.
Lower interest rates: Poor credit leads to higher interest rates, making borrowing money expensive. The better your credit, the more money you will save.
Better loan terms: Good credit gives you more options and freedom for repayment. Bad credit can limit your options to short-term loans with higher monthly payments.
Credit is always important, no matter how high or low your score. At the end of the day, everybody needs good credit to achieve their financial goals. That’s why it’s important to understand what can impact your credit score.
What Can Impact a Credit Score?
It might be surprising, but personal savings and stocks don’t impact your credit score. Credit score calculations look at your detailed credit history, and anything that impacts these calculations will impact your score.
The five main factors that impact your credit score are:
Payment history: when you make payments
Credit utilization: the amount of credit you use compared to your limit
Credit age: how long you’ve had credit and how old your accounts are
Credit mix: the types of credit you hold
Credit inquiries: how often your credit is reviewed
While this might look simple, many surprising scenarios can affect your credit. Unpaid parking tickets in collections can impact your payment history, for example. And closing a credit card can lower your credit utilization. You can review your free annual credit reports to watch for drops in your credit and work toward preventing a bad score.
What Happens with a Bad Credit Score?
Keep in mind that you can improve a bad credit score over time. But until you do, there can be negative consequences. Most credit scores range from 300-850, depending on the scoring model. A bad credit score generally ranges from 300-600.
Bad credit scores can lead to:
Rejected applications
Higher fees and interest rates
Lost work opportunities
Difficulty renting a vehicle
Required deposits for utilities
Difficulty securing a student loan
Expensive insurance rates
Difficulty opening bank accounts
Bad credit doesn’t shut every door, but it can make life more difficult and expensive. It’s important to check your credit score before buying a home, applying for student loans, and other important life events. This will give you time to understand your situation and make a plan to build and improve your credit.
How Do You Build and Improve Credit?
Now that you understand what credit is and why it’s important, you can plan for success. There are many ways to build and improve your credit without overextending yourself. No matter your score today, you can work toward a bright future with good credit.
Understand how credit works: Learn how your credit score works and what can impact it.
Set goals for yourself: Use this knowledge to set goals for minimizing debts, increasing utilization, and more.
Address your debts: Assess your debts and plan to pay them off.
Monitor your credit score: Look for suspicious activity on your credit report and be aware of the potential impact on your score.
Clean your credit report: Dispute errors on your credit report.
Get a secured credit card: Use it regularly and pay your bills on time.
Become an authorized credit card user: Build credit in association with somebody you trust.
Apply for a credit builder loan: Improve your score if you have poor or no credit.
Create a budget: Manage your finances to ensure consistent repayments.
Achieving a good credit score isn’t the end of your credit journey—once you have a good credit score, you will need to maintain it. Stay diligent and follow best practices to keep a good credit score.
How Do You Keep a Good Credit Score?
Don’t take good credit for granted. To keep a good credit score, you need to stay organized and sensible about your credit usage. This means understanding your responsibilities and following best practices for credit management.
Follow these tips for keeping a good credit score:
Stick to your budget: Committing to a budget can help you make payments on time, which is key to achieving a good credit score.
Avoid carrying debt: Credit utilization is the second most important factor that makes up your credit score. Unpaid debts accumulate interest, which means less money for you.
Pay bills and parking tickets on time: It’s important to pay all utility bills, phone bills, and parking tickets on time. Not paying bills can lead to collections and this impacts your credit score.
Don’t let debts go to collections: You should avoid collections at all costs. When unpaid debts go to collections, it can cause significant damage to your credit score.
Monitor your credit score and reports: When it comes to your credit, ignorance is not bliss. It’s important to watch your credit report for changes, errors, and suspicious activity.
Protect yourself from identity theft: A large drop in your credit score can be a sign of identity theft. Stay aware, protect your information, and consider a credit card with security features.
Use your credit card consistently: Using your credit card will help you build credit—just don’t spend more than you’re able to pay back each month.
Don’t close old credit cards: Closing a credit card lowers your credit mix, so it’s a good idea to leave old credit cards open, even if you don’t use them. Keep an eye on them for suspicious activity.
Only authorize people you trust: Authorized users on your accounts can impact your credit score. Only authorize accountable and trustworthy people.
Avoid retail credit cards: While retail credit cards can be easy to get, they can come with expensive rates and fees. And not all retail credit cards report payments, making them less ideal for building credit.
Don’t treat credit like extra cash: Building credit takes organization and discipline. You should always stick to a budget and avoid spending beyond your means.
Your credit score is like a financial reflection of you, so take pride in your credit and make an effort to keep a good score. Knowledge is power—the more you understand credit, the more confident you’ll feel when preparing for large purchases and other financial ventures.
Whether you have good or bad credit, it’s all about setting goals and staying organized. Remember, your current score is not set in stone. You can always improve credit management and make a difference in your future.
If you’re worried about bad credit or just want to see where you stand, get your free credit score today.
