Dear Liz: I recently paid off a large amount of credit card debt: over $15,000 in total to several credit card companies. How long does it take for my credit report to reflect that? I will be moving into an apartment in the next month or two. I don’t want my application to be denied because my debt is still listed on my credit report. I live with my father right now as he needs 24-hour care, but in the near future he will need to move into a nursing home as he has advanced dementia.
Answer: Credit card issuers typically report balances to the credit bureaus every month. Many report your balance as of your card’s statement closing date. If you paid off a balance a few days after the card’s statement closing date, you may not see the change reflected in your credit reports and credit scores until the next billing cycle.
High debt levels relative to your income could be a concern for landlords. Typically, though, they’re looking for bigger red flags such as late payments and collections that indicate you don’t pay on time.
Many landlords use credit scores as an initial way to evaluate applicants, followed by a closer look at applicants’ credit reports. If you maintain good scores and have no negative marks, you should be seen as a good candidate.
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A surprisingly low rate promised on a home equity line of credit is probably just a “teaser” rate, which eventually could go much higher.
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Getting a second financial opinion
Dear Liz: My wife and I recently retired. Our investments are managed by a certified financial planner. Our nest egg has not shown much growth over the last several years. We think it is time for another professional advisor to analyze our portfolio and see if we are really heading in the right direction. Is this out of the ordinary to seek more advice and how would we go about it, without offending our current planner?
Answer: You can certainly consult another advisor, but consider talking to your own first.
Start by asking the certified financial planner how your portfolio has performed relative to an appropriate benchmark over the last five years. The planner should be able to explain what benchmark was chosen and why. A portfolio that invests heavily in bonds, for example, will have a different benchmark than one that invests mostly in stocks.
If your portfolio is lagging behind this benchmark, then ask the planner what changes can be made to improve your investment performance. Switching from actively managed investments to passive ones, such as index mutual funds or index exchange traded funds, could save on costs and improve performance because few actively managed investments manage to beat the market.
If your portfolio is performing appropriately relative to its benchmark, then discuss whether you want to take on more risk for better returns. Many planners recommend retirees have a substantial portion of their portfolios in stocks for inflation-beating growth.
Your certified financial planner should be open to this discussion and ready to course correct if necessary. If you find that’s not the case, then it may be time not just for a second opinion but for a new advisor.
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Divorced spouse benefits and remarriage
Dear Liz: My recently divorced girlfriend receives Social Security based on her ex-husband, who is still living. If we were to get married, would either of us lose part or all of our Social Security benefits? It seems like a simple, straightforward question, but every Social Security representative I speak with by phone or in person gives me a different answer. My girlfriend did not work long enough to earn her own Social Security benefits. She was married over 30 years and is over 60.
Answer: The answer to this question isn’t complicated, so it’s unclear why you got different answers. If the ex-spouse is still alive, then your girlfriend’s benefit is a divorced spousal benefit that ends if she remarries.
If the ex-spouse were not alive, then your girlfriend would be receiving a type of survivor benefit known as a divorced survivor benefit. People receiving survivor benefits can keep them after marriage if they are 60 or older at the time of the marriage.
Liz Weston, Certified Financial Planner, is a personal finance columnist for NerdWallet. Questions may be sent to her at 3940 Laurel Canyon, No. 238, Studio City, CA 91604, or by using the “Contact” form at asklizweston.com.
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FAQs
Credit reports typically show anywhere from 7 to 10 years of an applicant's credit history. Landlords should look for any gaps in payments to loans, credit cards, and other financial obligations. Consistency is a crucial part of financial responsibility, as you want a tenant will consistently pay rent each month.
Do landlords look at credit score or credit history? ›
Before you rent an apartment, the landlord can check your credit history. You may also be asked to pay a holding deposit. If a credit check is requested, the landlord will check your credit history through a credit reporting agency. Landlords usually do this before deciding if they will rent to you.
Why do you think landlords care about an applicant's credit score when deciding whose application to accept for a rental apartment? ›
Landlords and property managers typically run a rental credit check on potential applicants to minimize their risk and avoid leasing to someone who might struggle to pay. For would-be renters, the credit-check process may seem mysterious.
How much credit history do you need to rent? ›
Landlords generally prefer a minimum credit score of at least “good,” which is 670 to 739. A score at or above that range will make apartment applications easier. Still, even a “fair” (580 to 669) or “poor” (300 to 579) score won't necessarily put the kibosh on your rental hopes.
Can you get an apartment with a credit score of 500? ›
Yes, renting an apartment with a 500 or below credit score is possible. However, you might not get the apartment of your dreams until that score improves. Fortunately, you can still get a decent apartment if you provide strong proof of income, get a co-signer, or rent on a month-to-month basis.
Do landlords use TransUnion or Equifax? ›
Each of the three major credit bureaus, TransUnion, Equifax, and Experian, provide a consolidated report to help you screen prospective tenants.
What credit score will get you denied for an apartment? ›
Most landlords seek credit scores of 650 or higher as a sign of tenant responsibility. Applicants with scores below 600 may face additional hurdles in securing approval. Exact minimum thresholds vary widely depending on factors like the type of apartment, current occupancy rates, and the landlord's discretion.
What are the best credit references for rental application? ›
Credit references should be businesses that can provide positive details about a financial relationship you've maintained. For example, credit references may include a bank that you have a credit card or loan with, a company whose bills you regularly pay, or even previous landlords.
Can I rent an apartment if I have credit card debt? ›
If you are about to embark on an apartment-hunting journey, don't let your credit card debt stop you from renting the place you want. You'll have to be financially attractive to the leasing agent, and out-of-control credit card debt can suggest you won't be able to keep up with rent payments.
Do landlords use Fico or Vantage? ›
Lenders and landlords use both types of scores to determine your ability to pay your bills on time. However, these methods use different percentages to calculate your score. Your FICO score may be different than your Vantage score, depending on your financial history.
Both scores consider your history of credit card or loan payments. For example, your scores may decrease if you miss payments but improve if you make consistent on time payments. Your credit history under both scoring models may include your rental payments, which can improve your score.
Does rental history show up on a credit report? ›
It's unlikely that your rent payment history appears on your credit reports, but that's not because paying your rent on time isn't important. More likely than not, it's simply because your landlord doesn't report your rent payments to the credit bureaus (Experian, TransUnion and Equifax).
Which credit score do landlords use? ›
Landlords use Equifax, Experian, and TransUnion to review your credit report and score.
What does a landlord see on a credit check? ›
Information included in a landlord credit check includes payment history, the existence of a bankruptcy or accounts in collections, debts currently owed and more. Landlords also consider other information when approving tenants for a rental, including current income and history of employment.
What FICO score is used to rent a house? ›
Generally, most landlords require applicants to have a credit score of at least 620 to be considered for rental housing. This means that if your FICO score is lower than 620, you may be denied an application or asked for additional security deposits or co-signers before being approved.
Can landlords see your bank balance? ›
One of the information the landlord will ask is your bank balance. However, you can always refuse to divulge such personal information. At this phase in your application, the Landlord can legally ask for any information that can confirm your capability to pay the rent.
Can landlords in NY ask for credit score? ›
Housing providers have a right to set financial and credit qualifications, a process that provides some assurance that the applicant will be a good tenant. Qualifications and inquiries must be applied equally to all applicants and must not be influenced by race, national origin, or other protected factors.
Does rental history build credit? ›
If you regularly pay your rent on time and in full, you can have your good payment history reported to credit bureaus to help raise your credit score through a rent-reporting service. Know that any rent-reporting services could require a fee for the service, which is usually paid on a monthly basis.
Does credit matter if you have a voucher? ›
If you have a housing voucher that covers 100% of the rent, you should not be rejected based on your credit. If you pay a portion of the rent out of pocket, your credit may be considered on a case-by-case basis.
