Maybe someone has told you that trying to rent apartment with bad credit is a waste of effort, but that’s not necessarily the case. It’s true that bad credit can result in a denial of the application, but not all landlords will automatically reject you as other factors are taken into consideration, such as your salary and previous rental records, if any.
Rent Apartment with Bad Credit ~ Why Do Landlords Check Your Credit?
Landlords check your credit score (How Credit Reporting Agencies Work) because they’re looking for evidence that you are predictable, consistent and stable. For these reasons, it’s very important you learn how to have a good credit score. You prove your consistency by doing the same thing over and over, so if your credit score shows that you’ve had late payments, then it isn’t going to build confidence and can make them doubt your ability to handle the financial obligations.
Landlords determine stability in different ways, including the number of years you’ve been working for a company, how long you have had a job, your payment history, the number of accounts you have and so on. If you’ve been working with the same company for a long time and have had no problems there, it’s a sign that you’re stable and can be relied upon. Given these facts, it’s easy to understand why landlords want to check your credit score. That being said, there are a lot of strategies you can use to overcome this problem.
Strategies to Get Your Rental Application Approved
The first thing you need to do is check your credit score and figure out what’s wrong with it. Is it really as bad as you think it is? Read the score before you go hunting for an apartment so you’ll know what you’re dealing with.
Since your landlord is going to review the information there anyway, you might as well check the credit score. If there’s any inaccuracy, now is the time to settle that dispute, rectify those mistakes and improve your credit score. Here are a few more things you can try:
- If you don’t want to deal with credit score issues at all, then look for a landlord that doesn’t check credit scores. Usually, apartment complexes are run by large, complex management companies and demand a credit check, so you’re better off renting apartments operated by individual landlords that don’t check credit or who are willing to take a chance on tenants that don’t have a solid credit history but has a steady income.
- Check online classifieds for individual landlords: online classifieds is one of the best places to find apartments run by individual landlords rather than by large companies. Just go to the housing section in the classified ads where there are townhouses, condos, apartments and houses and make sure you look in your area. There used to be a time when only companies were listed there, but that’s no longer the case as individual landlords are now listed online regularly.
While you’re looking for locally available apartments for rent, inquire from the landlord about the criteria used to approve a tenant’s application. Knowing what to ask a landlord is important so make sure you know what to do. Your chances of being approved go down if you have unpaid balances to utility companies or landlords, so pay those debts now and ask the company to write a letter indicating that your debts are now fully paid. Here are some other strategies you can try:
- Write a letter to your prospective landlord explaining why you had financial problems in the past, be it medical bills, divorce, job loss etc. However, make sure that your letter points out that you are now financially settled and capable of making payments.
- If you have a steady source of income now, chances are the landlord will overlook a bad credit score. If your income is three to four times the required rent then you’re in good position, but you do need to present evidence of your income such as two months’ pay stubs. That ought to be enough to convince the landlord to take a chance on you.
- You may also consider getting someone to co-sign the lease agreement, but make sure the co-signer has a good credit standing. Just remember that if you get evicted or skip on the rent payment for whatever reason, the landlord has a legal right to go after the co-signer as well.
- Pay more upfront: even if you do get approved with a poor credit score, you’re likely going to be asked to pay a higher security deposit or anywhere from one to three months in advance. If you don’t have a good credit score and plan on renting an apartment soon, save money now since you’re going to need it for the advance payment.
What if I Have No Credit?
Having a good credit history helps in renting an apartment, but what if you don’t have any credit at all? Suppose you’ve just graduated from college and haven’t established any credit history? Your situation is actually a bit simpler compared to those who have a poor credit score, but your approach will be similar to them in many ways. Here are some suggestions.
- Look for an Individual Apartment Owner: As has been pointed out earlier, individual owners are receptive to these situations and allow people with no credit to rent their property. What’s important is that you prove that you have a steady source of income. If you can prove this then your chances of getting approved will be high, and in fact it’s probably going to be a lot higher than those with bad credit.
- Offer to Move in Immediately: An empty apartment takes its toll on landlords because they have to shoulder the utilities and mortgage without getting compensation because nobody’s renting. If the apartment is empty and the demand for renters is low in that area, you’re likely to get approved if you offer to move in quickly. In short, look for apartments in places where there’s little demand.
- Show Your Savings Balance: Even if you don’t have a credit history, you could get approved if you can show the landlord your savings is more than sufficient to pay the rent. A quick tip here: balancing your finances will be much easier if you keep the rent expenses to a maximum of 1/3 of your monthly income, so if you’re bringing in $3,000, look for apartments with a monthly rent of no more than $1,000. If you don’t have a stable job yet, try to convince the landlord by showing him your savings account. The amount that will be needed to “impress” the landlord depends on how much the monthly rent is and on other requirements. To be safe though, your savings have to be such that you can pay several months of rent.
If you can afford it, you should pay a few months’ worth of security deposit, around two to four months will be nice. This will provide some assurance to the landlord that you’re not going to run off for the next few months. Second, it increases your credibility and demonstrates that you’re willing to pay.
Make certain that your payment is properly documented so there won’t be any misunderstandings later. If you’re going to rent the place for a while, keep copies of all the payments you make as well as other documents so if there are issues later on you’ll have the papers to back you up. There are other ways to boost your credibility even if you don’t have any credit history.
One of the best ways to do this is to show your would-be landlord that you have a solid reputation with your previous landlords and business associates and employers. While landlords can be strict with requirements, most of them will be happy to give you a chance if you show them that you have a good reputation at school or work.
If your employers or former teachers say that you are of good character then it’s going to help convince the landlord that you’re responsible with money and can be trusted. Bottom line: your character reference can be as important as your financial standing so don’t discount that element. You can also talk to the landlord and offer to go on a short lease or start month to month.
Usually it takes landlords several months to complete an eviction of a tenant who doesn’t pay. If you offer to sign up for just three months or month to month, you give the landlord the option not to renew you if you don’t meet the required standards. Even if you know that you have the capability to pay the rent every night, this approach will give him more flexibility, and it also demonstrates your willingness to be flexible.
For many, the idea of trying to rent apartment with bad credit seems impossible, but really it’s not, provided you have the know-how. Even if you have bad credit or no credit at all, just following the tips given above will increase your chances of having your application approved.