If you’re like most young adults, you’ve dreamed of becoming independent and living life on your own terms. Renting your first apartment is usually a major turning point on that journey. Your credit can have a positive or negative effect on your chances of renting an apartment; a student loan that you’re repaying can be either an asset or a liability – it all depends on how you’re handling it.

Student loans are a type of loan called an installment loan. By making your monthly payments on time without interruption, you’ll be showing solid credit behavior that can help you begin your adult life on the right foot. On the other hand, falling behind on your student loan payments can trigger other issues that take time to sort out.

For every semester that you borrow money to attend college, a separate loan entry appears on your credit report. Making timely payments on these separate accounts shows consistent responsibility and dependability in repayment, but late or missed payments have an opposite and potentially detrimental effect.

How can all this activity help or hurt your quest for the perfect off-campus housing? Landlords like to see that you are being responsible and trustworthy by meeting your regular financial obligations on time, month after month. Missed payments may signify that you’re experiencing some cash flow consistency problems, and can hurt your chances of finding the housing that you’re seeking. This is especially true if you’re looking for a place by yourself, where your credit is the only one being considered in the application process.

Another factor that may affect your chances of renting an apartment is your total monthly debt versus your total monthly income. Your debt-to-income ratio is the sum of all your debt, including installment loans, divided by your total monthly income. Even though this ratio doesn’t measure your creditworthiness, it does signify whether you are able to afford the additional expense of rent. Most landlords view a debt-to-income ratio of 43 percent or lower as acceptable. It is also advisable that no more than 30 percent of your income is going to housing. Landlords calculate this when they request information about your income – a common line on apartment rental applications.

Some landlords may allow you to rent an apartment with imperfect credit or a higher than ideal debt-to-income ratio. But they could require you to get a cosigner, pay a larger initial deposit, have your monthly rent automatically deducted from your bank account, provide letters of good tenancy from previous landlords, or all of the above.

Even though poor credit may not always stop you from getting an apartment, it’s important to stay up to date with your student loans to avoid having to postpone your independence.

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_{This article is provided for general guidance and information. It is not intended as, nor should it be construed to be, legal, financial or other professional advice. Please consult with your attorney or financial advisor to discuss any legal or financial issues involved with credit decisions.}

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