72% of Property Managers Agree: Credit Score Has a Significant Impact on Rental Applications

Credit scores, references, and complete applications were among the most important factors for property managers selecting new tenants in the hyper-competitive 2023 rental market.

VANCOUVER, BC / ACCESSWIRE / May 30, 2023 / To give renters an edge on applications in 2023's tough rental landscape, Square One surveyed dozens of property management companies about their own rental application processes. After all, it's rarely been harder to find a home to rent in Canada; the vacancy rate for purpose-built rentals was just 1.9% in 2022-a full percentage point lower than the average from 2012-2021. The vacancy rate for condo apartments was no better, at 1.6%.

To start, Square One asked property managers the most important thing a tenant can do to make a good first impression. Here are the most common responses, and the percentage of property managers that ranked each as their most important:

1. The applicant has accurately completed their application (50%)
2. The applicant is polite and friendly (31%)
3. The applicant is punctual (8%)

It's no surprise property managers ranked complete and accurate applications highly, but supporting information mattered as well. Square One asked property managers to list their three most important pieces of supporting information when evaluating tenant applications:

1. Credit score (72%)
2. References from previous landlords (69%)
3. Employment history (50%)
4. Rental history (50%)
5. References from employers (33%)

Unsurprisingly, three of the top five items concern the tenant's ability to pay the rent reliably. When Square One asked about potential red flags in an application, the responses painted a similar picture. Here are the top warning signs from the survey, and the percentage of respondents that listed each:

1. Low income or unstable employment (42%)
2. Incomplete or inaccurate application (39%)
3. Low or missing credit score (33%)
4. Short rental history (31%)
5. Advance payment offered to secure unit (8%)
6. Pets (6%)

The survey asked how potential renters might find other advantages. 78% of respondents said that offering a larger security deposit or advance rent payments would not help tenants get approved-several property managers even said this was a red flag. In fact, in some provinces, property managers aren't legally allowed to accept a larger security deposit.

When asked if tenants can find greater success by applying during a certain month, most property managers answered "no," though a few noted that December through February may be better than the rest of the year.

When asked if they require their tenants to hold active tenant insurance policies, 80% of respondents said they do. It serves renters well to maintain active insurance even if their landlord doesn't require it, as it helps tenants build an insurance history, accrue claims-free discounts, and recover financially in the event of a loss.

Of course, knowing what property managers are looking for and actually meeting those expectations are two different things. For example, what can a tenant do if they know their credit score or employment history is below a property manager's standard?

"No one is perfect," says Alvin Cheung, property manager with Birds Nest Properties. "People face roadblocks throughout their life. Be transparent, explain your situation, and people will appreciate your honesty."

Similarly, there are ways that a first-time renter can overcome their lack of previous landlord references or rental history.

"References from both professionals and friends can be helpful," says Cheung. "This can range from your accountant, former teacher, sports coach, or your neighbour. Similar to a job interview, someone who can speak on behalf of your character would be helpful."

But, even if a potential renter has a great application, there's no guarantee of success in such a competitive market. What should renters know about trying to break through and get accepted?

"Have some fun with it and take the time to provide a brief introduction and more information about yourself," says Cheung. "Don't be discouraged if you were not selected for a property. Landlords only have the ability to select one application, unlike a company doing a mass hire, so don't be put off by the process."

For more helpful tips on the rental application process, visit Square One's guide to completing rental applications. To learn more about tenant insurance, visit Square One's tenant insurance page.

About Square One

Established in 2011, Square One is an online home insurance provider based in Vancouver and operating in BC, Alberta, Saskatchewan, Manitoba, Ontario, and Quebec. Square One's focus is affordable home insurance in plain language, with customizable coverage and top-notch customer service. Square One offers homeowner, condo owner, tenant, and landlord policies. For more information or to get a home insurance quote, visit squareone.ca.

Contact Information

Aneel Mattu
Director, Marketing
aneel.mattu@squareone.ca
+17789192096

SOURCE: Square One Insurance Services