We often receive questions from landlords and tenants regarding how credit inquiries affect credit scores. A credit inquiry occurs when a consumer ‘applies’ for credit, whether that means buying a car or renting an apartment. Even if the consumer is not requesting credit assistance (applying for a loan), a company may choose to check the consumer’s credit history to determine if the consumer is responsible about paying his/her bills. This credit check results in an ‘inquiry’ or a ‘hard hit’ on the consumer’s credit report. Some landlords may worry that this will lower the potential tenant’s credit score and avoid doing a credit check for this reason.

It’s important to point out that credit inquiries have very minimal impact on credit scores. In general, inquiries account for less than 10% of a consumer’s credit score. One inquiry may impact the score by less than 5 points. In addition, rental housing credit inquiries will have a lower negative impact on credit scores than a loan or mortgage credit inquiry. Ultimately, the most important factor in determining credit score is paying bills on time and avoiding large debt and collections items.

For landlords, performing a credit check on potential tenants is vital in determining whether to rent to someone of not. While criminal and eviction background checks are also important in evaluating the quality of a rental applicant, credit checks help ensure that basic requirements are being met; the tenant can actually afford to live at the property and honor the lease.

tenant background check