Your credit score, also known as CIBIL score, can indirectly affect your rental applications in a number of ways. Although it does not have any bearing on rental applications in the unorganised market, but some landlords in big cities such as Mumbai and Delhi may consider the credit (CIBIL) score as well of tenants to determine their creditworthiness.
They may use the CIBIL score as one factor to assess a tenant’s ability to pay rent on time. A higher credit score can be seen as an indicator of responsible financial behaviour, which may increase your chances of being approved for a rental property.
Credit score affects rental applications in these ways:
Rental application: Some landlords or property management companies may have specific criteria for approving rental applications, which may include a minimum credit score requirement. For instance, some property company may reject the application of tenant whose credit score is below 600.
Security deposits: In some cases, landlords may require a higher security deposit or impose stricter lease terms for tenants with lower credit scores. This is because they perceive a higher risk of late payments or default on rent payments from individuals with lower credit scores.
ALSO READ: How to improve your CIBIL score with a personal loan? Here are 4 ways
Co-signer: If your credit score is low, the landlord may request a co-signer with a higher credit score to guarantee the lease agreement. This gives the landlord with added assurance that rent payments will be made on time.
Rental market: In competitive rental markets, some landlords may have the option of choosing tenants with higher credit scores over the ones with lower scores. A higher credit score can give you a competitive edge in such situations.
Your credit score is not the sole determinant of your rental application’s success, it can play a significant role in the landlord’s decision-making process. It’s essential to maintain a good credit score and address any issues on your credit report to improve your chances of securing rental housing.
Frequently Asked Questions:
Does a high CIBIL score offer better rental opportunities?
Landlords may also check your credit score when evaluating rental applications. A high CIBIL score can, therefore, raise your chances of securing rental housing, particularly in competitive rental markets.
Can there be mistakes in credit reports?
It is not uncommon to spot mistakes on credit reports. So, regularly checking your credit score allows you to spot any errors, such as inaccuracies in personal information or incorrect reporting of payments.
ALSO READ: CIBIL Score: How to use credit report to plan finances? Here are 5 ways
Is it advisable to take new credit to improve the credit mix?
No, it is generally not advisable to take on new credit in order to improve your credit mix.
How is average age of credit accounts calculated?
Average age of credit accounts is calculated by taking the sum of the ages of all your credit accounts and dividing it by the total number of accounts.
Is payment of debt enough to maintain a good CIBIL score?
Paying off debt is indispensable to maintain a good credit score. However, it is the responsible financial management that leads to a good CIBIL score.
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Published: 19 Apr 2024, 11:11 AM IST