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Having bad credit can make renting an apartment more difficult. Bad credit impacts not just your ability to get loans or secure a down payment, but it can also affect your ability to secure a rental apartment. Landlords look to credit scores, prior evictions, broken lease history and credit judgements to determine if a renter is trustworthy and reliable. If your credit report has a ding in any of these categories, you will likely have to take extra steps to get your name on a lease. However, if you follow our tips below, you should improve your chances of renting an apartment with bad credit.
1. Check your credit report.
There are three major credit bureaus – Equifax, Experian and TransUnion. Get reports from all of them since you never know which one your potential landlord prefers. You can also get free annual credit reports from the major bureaus through AnnualCreditReport.com. It might come as a surprise, but not all landlords look at just your credit score. Many of them prioritize eviction notices, credit judgments and outstanding obligations to your previous landlords or utility companies when determining if you are a reliable candidate to rent to. If you owe money, pay out your debts and get written confirmations of your payments prior to submitting your rental applications. Check carefully for errors, and if you find any, start a credit report dispute immediately.
2. Look for apartments with no credit check.
Most leasing and property management companies require credit checks. However, some individual landlords do not. If you decide to rent from such a landlord, we suggest that you carefully verify your landlord before paying any money. Lack of a credit check in the rental process is one of the red flags when it comes to rental fraud.
3. Get references.
Oftentimes, a credit score doesn’t define your trustworthiness or credibility. Sudden health problems, divorce or job loss can result in a poor credit score. To prove that you are a financially responsible person, ask your previous landlords, employers, or any other entities with whom you have had a financial relationship to provide reference letters.
4. Prove that you have a stable income.
Many landlords require a renter’s monthly income to be 2-3 times the rent to qualify for an apartment. You might not have great credit history, but if you have enough money in your bank account to cover at least 6 months of rent and can hold a steady job, you should be fine. Be sure to keep your pay stubs on hand. If you need help determining how much rent you can afford, try our rent calculator. This will give you a better understanding of your current financial state. Just plug in your household income and the amount of money you would to save, and we’ll do the calculations for you. Usually, you don’t want to spend more than 30% of your income on rent.
5. Be ready to pay up.
More likely than not your bad credit will affect your security deposit. In fact, we suggest you offer to put down more right off the bat to secure the rental. Be prepared to pay up to two to three months of rent as a deposit, as opposed to the usual one month of rent.
6. Get a roommate.
Some landlords might let you move in with a roommate without having your name on the lease. It’s a long shot but might be worth trying. Just make sure that your potential roomie has a good credit score and clean rental history without prior evictions.
7. Find a cosigner.
People that don’t have perfect credit sometimes get cosigners when they apply for a mortgage. You can do the same when trying to secure an apartment. Your cosigner needs to have a stable income and good credit background. Make sure that you are able to pay the monthly rent on time, or your cosigner will be liable for your debt and it will affect their credit.
While renting with bad credit is certainly possible, you have to be prepared to put more effort into your apartment search and application. We suggest you pay off your credit card debt months before starting your apartment hunting to establish a good pattern. If your potential landlord sees that you are on the right track, they might be more lenient and willing to look past your prior credit issues.