The Philadelphia rental market is currently one of the most bustling scenes in the United States, with Suburban Philadelphia being ranked the 17th most competitive rental market in 2022. As a renter, this means you have more competition and will need to make more considerations if you want to nab the place you want.
A crucial part of the application process is a thorough check of your credit history, so it’s best to not only ensure you have good financial habits but are also prepared for a credit check. Getting a good result increases your chances of getting the lease you want.
It’s also worth noting that reliable landlords are particular about the rental application process, especially when the market is more beneficial to their end. It’s a promising hurdle because it ensures that your neighbors have also been vetted through a clear process. As credit score and repayment are key to financing rentals, your landlord will definitely require a soft credit check. Make sure you prep by knowing the difference and key factors that will affect your credit.
The Difference between a Soft and Hard Credit Check
The first thing you need to know is that there are two different types of credit checks, namely soft and hard credit checks. The type of credit check done depends on the landlord’s screening process, you should expect a soft pull.
If you’re wondering what the difference between a hard and soft credit check is, there are actually a few factors that separate the two. The first distinction to consider is consent. A soft pull does not require your permission to be done, while you need to approve a hard pull before it is accomplished. It’s also worth noting that a hard credit check will have an impact on your credit score while a soft credit check will not.
Both kinds of checks include an in-depth view of your credit report. While a soft pull is more of an overview, both types basically cover your lines of credit, payment history, credit limits, existing loans, and other checks.
How a Credit Check Affects Your Credit Score
Because there is no impact from a soft credit check, you can technically have as many inquiries as you want in any span of time. In fact, lenders won’t even be able to see soft credit checks when they take a look at your report. This is most likely attributed to the fact that other parties, such as potential landlords or employers, can do a soft pull without even notifying you.
A hard credit check is a different case, though. Every time you get a hard inquiry, it affects your credit score. It’s not an intense dent, but it is quite significant especially if your credit score is on the lower side. You can lose up to 10 points when a hard inquiry is done, so you should be wary of how many inquiries you are getting at a time if you want to ensure your financial opportunities and score remain serviceable.
Philadelphia has a median credit score of 651, which is a good score but still lower than the overall average for Pennsylvania. It’s best to keep your rating within the ballpark of that number, aiming not to go any lower than 670 if you want to maximize your rental options.
Too many hard credit checks can hurt your score significantly, so it’s best not to take on too many loans or other forms of applications that will require such an inquiry. It’s also a good idea to space them out because a single inquiry will stay on your report for up to two years.
What Your Credit Check Means for Your Application
So, why is a credit check so important for your rental application? This is one of the major factors that landlords take into consideration when screening potential tenants. The information they get from your credit report can give them a good sense of your financial habits, ability to pay rent on time, and general responsibility.
If your credit report shows certain “red flags” like late payments, too many loans, or a low credit score, it may hurt your chances of getting a rental unit from them. Right now, 1 in 4 Philly landlords owns three to 24 units. According to the PEW Charitable Trusts, that accounts for more than a fourth of the city’s overall inventory. This means it’s important to prepare for a credit check from select landlords regardless of where you’re looking, mostly because the pool may not be as large as you think.