Can you afford the rent? Will you pay on time? Proof that you are a good credit risk is one of the key factors in a landlord's decision to rent to you. The credit check is a tool that most landlords will use to assess your credit worthiness.

Your Credit History Is on File

You build a credit file when you borrow money and pay it back. A credit report is a detailed report containing information about how you use credit and when you make payments. It also includes both current and past information on where you live and work. Credit reports are maintained by credit bureaus, which build a record of your credit history based on information given to them by creditors such as banks and credit card companies.

There are three major credit bureaus in the United States: Equifax, TransUnion and Experian. The credit bureaus will not release your information without your written consent. With your written permission, a landlord can receive a detailed report from a credit bureau. The report helps the landlord decide if you are a good credit risk, with the prime concern being your ability to pay the rent each month in full and on time.

Understanding Your Credit Rating

You've likely heard people talk about a credit rating, which is a numerical score that creditors use to assess your credit worthiness. It is calculated each time someone - a lender or a potential landlord - requests it.

The formula used to calculate your rating will use the information in your credit file. The scoring systems give you points for each demonstration of responsible credit use. Your credit rating is the sum of these points.

No History Makes Assessment Difficult

If you have never had a loan or a credit card, prospective landlords will have little or no information to review in your credit file. Although an empty file is not as bad as a poor credit file, an empty file tells prospective landlords nothing about any possible financial risks of renting to you. That's why establishing a good credit file is crucial.

If you are a first-time renter, have had credit problems or do not have a credit rating, you may need a guarantor's letter from a parent or close friend stating that the guarantor will assume the risk if the you fail to pay the rent.

How Do I Get a Good Rating?

Be sure to make loan and bill payments and minimum credit card payments on time. These timely payments will be reflected in your credit file and will demonstrate that you can use credit responsibly. As a result, your credit rating will be favorable each time it's calculated. Consistently missing payments, or making late payments, will lower your rating.

Your credit rating will change over time, based on how you use your money and credit. It may take months or years of demonstrating good credit to fix damage caused by poor credit repayment in the past.

Checking Your Credit Report Is Vital

Because errors and omissions on credit reports do occur, it is a good idea to check your file from time to time. Anyone can request a copy of their credit file from the credit bureaus via mail or fax. Telephone requests are not available, as a credit bureau needs to verify your identification. Forms that you can print and then mail or fax are available on each credit bureau Web site.

If you find an error or discover that favorable credit information is missing, contact all the credit bureaus and have it corrected to ensure your credit history is accurately represented to creditors and lenders. You are going to need proof, so be ready to provide statements or receipts. Each bureau sends its policy for reporting an error with the copy of your credit file. Each policy is different, so be sure to review it once you have collected your proof of payment.

A credit bureau will only correct false information in your file. Factual payment information cannot be changed or removed. If you missed a payment by accident, it will be reported as missed on your file and cannot be changed. In this situation, you have the right to have a comment included with your file explaining why you missed the payment. This comment may or may not be considered the next time someone requests your file and generates a score.

Reference and Other Checks

Beyond the basic credit report, a landlord can determine your suitability as a tenant in other ways. Some landlords will validate all your references and run a thorough check into your rental history.

After checking your financial suitability, landlords will want to know what kind of tenant you are. Most often, they will ask former landlords about your character as well as your past rent payment patterns. While some people will check only with your last landlord, others will also check with your past two or three landlords.