Renting An Apartment With Bad Credit
Of all the things your credit score influences, you might not think that it plays a part in the rental process, but it does and in a major way. Some landlords might deny your rental application if you have blotchy credit, even if you have a spotless rental history and a sizable salary. Others may only check your credit to see if you have a previous eviction or other rental-related blemish on your credit report. If you’re worried that a bad credit history will keep you from finding a place to live, there are other options.
1. Know What's On Your Credit Report
Check your credit report before you start apartment hunting so you know what's in your credit history. You have credit reports with the three major credit bureaus and you should check all three of your credit reports since the landlord could check any of them. If you spot any inaccurate information, now's the time to use the credit report dispute process to have the errors removed. The less negative information you have on your credit report, the better your chance at getting approved for an apartment.
At a minimum, you should check your credit report so you're aware of what a landlord will see when they check your credit. You don't want any surprises.
2. Look for Rentals That Don't Check Credit
The best way to get an apartment when you have bad credit is to find a landlord that doesn’t do credit checks. Typically, apartment complexes are owned by large property management companies that require a credit check on all applications. These types of apartments will most likely turn you down if you have bad credit. Instead, aim for properties owned by individual landlords who often don't check credit or who may be more willing to take a risk on a tenant who doesn't have the best credit history but has good rental history and solid income.
Here are a few places to find rentals.
Check Craigslist.org, an online classified listing. In the housing section of Craiglist, apartment owners advertise rentals (apartments, condos, townhouses, and houses) they have available. Make sure you're looking in your city. Years ago, very few management-owned apartment complexes listed rentals here and it was easier to find individual landlords. Now you'll find all types of rentals in the mix. Landlords still advertise here, but you'll have to sift through lots of listings to find them.
The classified section of your local newspaper (or that of the area you’re interested in moving to) is another place where property owners advertise for rentals. Sunday's paper usually has the most advertisements. Many newspapers have their classified ads listed online, too, so explore this option if you're moving out of town.
Check with real estate agents in your area to find an apartment, townhouse, condo, or house to rent. Many homeowners, especially those who live out of town, use real estate agents to rent their homes.
Scout the neighborhood you want to move to. Homeowners may be renting their homes and may only advertise with a sign in their yard or by word of mouth. Drive around the neighborhood looking for "For Rent" signs and ask friends and family members if they know of anyone who might be renting out their home.
You can feel out landlords to figure out if they do a credit check. As you inquire about an apartment, ask the landlord what criteria is used to approve tenants for the rental. If a credit check isn't one of them, then you have one less thing to worry about. However, if there is a credit check involved, you have some additional options for getting approved.
3. Get Recommended
Getting someone to vouch for your financial responsibility can help dampen the effect of negative entries on your credit report. Contact people with whom you've have a financial relationship—previous landlords, your bank, current/previous employers—and ask for a reference letter.
You're more likely to be denied if you have unpaid past due balances, especially to other landlords or utility companies. If you have past due accounts on your credit report, pay them off and get the business to write a letter or print a statement showing the account has been paid in full.
Soften the negativity of your credit report with a letter that explains the situation that caused your financial problems to persuade the landlord to rent to you. Divorce, medical bills, and job loss are common situations that lead to bad credit. Make sure your letter describes how you've cleaned up your finances and why you can handle a rental.
Be careful about the situations in which you use letters of recommendation. If a landlord hasn't checked your credit and isn't aware of your credit history he may become unnecessarily suspicious when you hand him a letter explaining your past financial problems. Landlords have to get your permission before checking your credit, so it won't be a surprise when they do.
4. Have Steady, Provable Income
Sufficient income can offset a negative credit history. First, you need to make about three to four times the monthly rent. Not just to meet the landlord's requirements, but to ensure you can afford the monthly rent payments. Second, you need solid proof of your income. Two or three months of pay stubs proving your stable income is often sufficient.
Getting someone to co-sign your lease is another option. Your co-signer will need to meet the necessary credit qualifications so they'll need to have good credit.
Keep in mind that if you skip out on your rent or get evicted for any reason, the landlord can legally go after the co-signer for the value of the lease. Use other people's credit sparingly and be more careful with it than your own.
6. Be Prepared to Pay More Upfront
Whether you're able to get around the credit check altogether or you get approved for an apartment despite your credit history, expect to pay more money upfront. You might be required to pay a higher security deposit or between one and three months of rent to move into your new apartment.
If you don’t have the best credit and will be moving in the near future, start setting some money aside and begin looking for a new place as early as possible. The sooner you start looking, the more time you'll have to prepare.