How Much Does It Cost to Check a Credit Report in a NYC Rental Application
It’s no secret that landlords in New York City have every reason to be picky when it comes to renters.
Though this city has millions of well-meaning renters, the sheer number of terrifying stories of terrible renters is enough to make most people balk at the thought of letting anyone in their home.
Doing due diligence on a renter is a must if you want to keep a property safe.
It makes sense. Among landlords, the easiest way to see if a renter is trustworthy is through a credit report check.
Most of the time, the fee for the check is passed onto the potential renter. Wondering how much it costs to pull your credit score? Here’s the truth behind it…
What Do Landlords See In A Credit Report?
Believe it or not, many renters won’t see your credit score in a report. Rather, they will see a detailed account of your financial life as creditors reported it. This contains both good and bad information, including:
- Payment History. Both on-time and late payments are included in a credit report. Late payments are often illustrated by how late they were.
- Negative Marks. If you had a repossession, a charge-off, or a collections account, these will be viewable on your credit report.
- When You Paid. Every payment and any derogatory mark will be seen on a monthly basis, so landlords will be able to gauge when you were struggling.
- Judgments and Public Records. Court cases you lost, foreclosures, and bankruptcies all show up as well. These are often major red flags for landlords.
- Addresses You Lived At. This can help them figure out if you have been kicked out from multiple places, or if you have unstable employment.
- Your Loans and Credit Accounts. This gives them a good idea of how much debt you owe and how you handle it.
- Whether Or Not You Paid Collections. Collections don’t just go away if you ignore them. You still owe that debt, and landlords will see that, too.
Landlords do not see evictions on a credit report, nor do they see your income. However, many of them do pull up renter's reports, which will be discussed later.
How Much Does It Cost To See A Credit Report?
If you are looking for an apartment, you can get your credit report for free by going to AnnualCreditReport.com, and see for yourself exactly what your credit is like.
You are entitled to one free credit report a year, so be wary of when and how many times you pull it.
This lets you check your own credit report without harming your credit score since it’s considered to be an account review of your own history.
Landlords have to pay. Most will pay around $20 to $30 for a credit report. They will charge applicants this, along with a fee for doing the work to run your score.
Can I Opt Out Of A Credit Check?
Yes, but this will typically disqualify you from getting the apartment you want.
However, you might be able to bypass this process if you rent directly from a small "mom-and-pop" landlord.
This is usually a more hands-on landlord that may even live at the address and may only have one or two other apartments in their house.
That being said, many of these types of landlords still check credit, but you may better be able to state your case directly for them to consider if your credit is less than great.
What If I Pull Up My Own?
Most landlords won’t accept this, because it’s possible that you may have tried to forge a better report than what you really have.
Pulling your credit score themselves is the only way they can know for sure.
How Much Should I Have My Credit Score Be To Rent?
It varies, but the majority of landlords want to see a score of at least 670 in a potential renter.
Some may go as far as 620, while others will say a 740 is too low. Scores are vague, and not a “set in stone” requirement.
It all depends on the landlord or management company.
Meet The Renter Report
Because of how risky having a bad renter can be, many landlords will go a step further. They will pay money to get what is called a “renter report” of you before they approve you for a place.
Renter reports go beyond the typical items seen on a credit report and will expand to give landlords a far better idea of who you are.
What’s In A Renter Report?
A renter report will typically show feedback from both your credit report as well as other venues. It’s like a background check blended with a credit report. In a renter report, you will be able to see:
- Former Landlords (Plus their contact information for references.)
- Evictions Filed. This is the big difference between credit and renter reports. You can have good credit but a terrible renter report for this reason alone.
- Credit Report Information. This often comes with a credit score.
- Criminal Background Checks. This includes sex offender registry notices.
How Much Does a Renter Report Cost?
These can cost anywhere from $30 to $50, depending on the company. Companies like Cozy will furnish a full report for $39.00.
Others are more affordable, at around $10 to $20. It all depends on who you work with, though it’s worrisome if you have a fee that’s over $50.
What Else Do Landlords Do With These Reports?
Some landlords will also use background checks as a way to verify employment. They need to know you make a steady income, and won’t be bailing on their rent.
Verifying employment is a very hands-on process, which may or may not involve calling the employer to confirm everything.
Are These Always Part Of The Application Fee?
Usually, yes they are. The application fee covers work landlords have to do in order to screen you as a responsible renter.
The screening takes work. Landlords want to be compensated for their work.
If you're dealing with the landlord's agent or broker, they will usually charge you their brokerage's price for an application fee, which can be upwards of $100.
Guarantors usually pay a lot more than the applicant.
The average application fee a real estate brokerage will charge is from $50-$150, with guarantors paying around $75-$250.
That being said not all agencies will charge you a fee. Many brokerages and landlords now use third parties sites like On-site, which the applicant pays directly and costs about $50 per applicant.
Can These Fees Be Refundable If I Get Rejected?
It's highly unlikely.
Most landlords will not refund you a fee if you don’t pass their check.
They still paid for the report and they still had to work in order to determine you weren’t a good fit.
Local Laws To Know
Though credit checks can cost a pretty penny, recent laws enacted by Governor Cumo changed how real estate does business.
Right now, he placed a cap of $20 for credit report fees passed onto renters.
That being said, the average authorization and background check fee totals $60 to $100.
This is because the law doesn’t restrict the price of a rental background check, nor does it restrict labor costs associated with vetting renters.
Though fees may be higher in some cases, they shouldn’t be exorbitantly high.
If you feel you have been overcharged, ask your realtor what could be the issue. In many cases, they may be able to find a way to either report the landlord or figure out why the fees are higher.
What Paperwork Do I Need to Qualify for an Apartment?
Besides the mandatory credit check, the landlord or management company will require you to submit income documentation.
It's wise to prepare the required documentation before you start your search, preferably in digital form so you can be ready to go when you find your dream apartment.
You will need to provide a government-issued photo ID, a letter of employment, 1-2 most recent tax returns, last 2-3 pay stubs, and the most recent 2-3 bank statements.
The photo ID should be a passport, state ID, or driver's license. If you have W-2's or 1099's that reflect your total income for the year, you can hand those over instead of a tax return.
A letter of employment should be on company letterhead and include the date, your name, your start date, your position, and your salary. If your employer uses phone verification, that's usually an option as well.
If you receive direct deposit for paychecks, you can provide your direct deposit statements or even be able to highlight the deposits on your bank statements as long as it clearly shows that your employer is the payor.
Why Do Landlords Need to See Income Documentation?
Landlords need to see that the applicant or potential tenant not only will pay the rent on time but also actually earns enough and has a stable source of income to do so.
A photo ID proves you are who you say you are.
The letter of employment confirms that you are currently employed (as opposed to just have recently lost your job).
The pay stubs corroborate your employment and salary.
Landlords look at tax returns to assess how stable your employment and income in the last few years have been.
And bank statements generally show your landlord that you know how to balance your own budget. Providing just the balance page is usually enough as they are not interested in reviewing your expenses line by line.
What Kind of Income is a New York Landlord Looking For?
The rule of thumb is that an applicant should earn about 40 times the monthly rent per year.
For example, if the monthly rent is $2,000 a month, the applicant needs to show they earn at least $80,000 a year or about $6,670 a month.
Depending on the landlord or property manager, they may adhere strictly to this metric or be ok if you make a little less.
Some may even accept 35 times the monthly rent, while others want to see higher income.
What If My Credit is Poor and/or My Income is Too Low?
The first and easiest course of action is to get a guarantor. A guarantor is someone who guarantees your lease and will be a responsible party should you not make the rent.
For this reason, a guarantor is usually someone very close to the applicant.
Fees and criteria are usually set much higher for the guarantor. They usually need to make at least double what the applicant is making and have excellent credit.
Jetty even offers security deposit services if you don't have the money upfront.
These services are also great for foreign nationals who may not have a guarantor in the States.
Besides getting a guarantor, you can also try to offer a larger security deposit or more months of rent upfront.
If you have additional liquid assets or savings, you should provide these statements to supplement your income.