Problems with bad credit don’t just stop at a car loan or mortgage rejection. They can even go as far as denying you the opportunity to rent your ideal apartment. Yes, your poor credit history can be a major obstacle when looking for an apartment to rent.
A majority of landlords and just about all property managers use credit checks when vetting potential tenants. They take a serious look at your credit history to determine if you are a financial risk or not.
With a bad credit history, you may have a difficult time qualifying for the apartment. You can’t entirely blame the landlords and property managers. They simply want to know if you can be trusted to pay rent on time or if your credit report indicates a history of paying your bills late.
It is not easy to convince the landlord that you are a reliable applicant when your credit history says otherwise. So can you get the rental with a bad credit? What should you do? Here are eight ways that you can rely on to overcome the problem.
1. Rent from an independent landlord
The first, and most natural step, is to find an apartment managed by an independent landlord who won’t check your credit. This may sound simple but if truth be told, it’s not an easy task. Most apartments are managed by large property companies with corporate guidelines that they follow to the letter before approving a potential tenant. They’ll most likely deny you the renting opportunity outright in an effort to mitigate risks.
If you are in luck, you’ll find an apartment owned by an individual landlord who may not bother to check your credit score as long as you can pay the rent and deposit. Independent landlords and property managers will be willing to work with your credit situation especially if you explain yourself honestly. You can scour online listings such as Craigslist or classifieds in your local newspaper to find individual owners of apartments looking for tenants. If you have the time, and energy, you take a walk around the prospective neighborhood in search of a “To Let By Owner” sign.
2. Get a co-signer or guarantor to back you
You could also ask someone close to you, such as your parent, relative, or close friend, who has good credit to co-sign the application form with you. This is an easy option but in practice it may present a few challenges. You’ll be the one occupying the apartment but the co-signer accepts to cover payments due in case you fail to pay rent. He or she takes the risk on your behalf and may take over your freedom or control your expenses. It is quite uncomfortable to have the co-signer paying for your rent so make sure you can comfortably pay the monthly rent before asking someone else to be your guarantor. You wouldn’t want the arrangement to strain your good relationship with the co-signer.
3. Make a larger initial deposit for the apartment
One way of convincing the landlord or property manager of your commitment to pay rent on time despite your credit history issue is by offering to pay a larger initial deposit than what is usually charged to other renters. This acts as a form of additional security just in case they are doubtful of your ability to pay rent in a timely manner. This method may not be applicable everywhere because some properties have very strict deposit rules. If the option is allowed higher deposit that you’ll pay in good faith will help to build trust with the landlord. Ideally, you could even offer to pay three to six months’ rent in advance if you can afford it.
4. Give permission to deduct your rent
Most businesses, including property managers and landlords, find automatic payments quite convenient and easy to process. You can offer your landlord the ability to deduct your monthly rent automatically from your bank account to sweeten the deal. It helps to propose this option upfront to earn their trust before discussing your bad credit issue. Be prepared to present your letter of employment to prove that you have a steady income.
5. Provide proof of solid income
In most cases, all that a landlord or property manager needs to be assured of is the fact that you have a steady income and not likely to default on your rent for any reason. Your credit history might be a bit shaky but if you can prove that you have a regular solid income, many landlords will gladly accept your rental application. Before you apply for an apartment, make sure you have proof of income documents ready, such as your latest pay stubs, letter from your employer showing your employment status and income, and your tax returns.
6. Find a roommate with good credit
If you are willing to share the apartment, then go ahead and find a roommate with good credit to sign the lease. If the landlord only allows one tenant to sign the lease, your roommate will sign it without a problem. Another good option is to move-in with a roommate who’s already in mid-lease. In such an agreement the person listed on the lease will be the one required to have better credit history. There are other benefits of having a roommate such as sharing bills and reducing your financial burden as you work towards paying your debts and fixing your credit faster.
7. Recommendation letter from your present landlord
It won’t hurt to ask your current landlord to write a letter of reference for you, especially if you have maintained a good rental history in the past. A letter of reference from your previous landlords can really help despite your low credit score. Have the landlord point out in the letter your track record for timely rent payments, respect for property and neighbors, and the length of time you have lived at each property.
8. Be truthful, straightforward, and show your progress
Bad credit does always mean that you are a bad money manager or a reflection of irresponsibility. It could be due to an unavoidable misfortune such as loss of a job or medical issues. If this happens to be the case, be open with the landlord and explain the cause of your bad credit issue and what you have done or are doing to improve the situation. Most landlords simply want to work with a person who is responsible and committed to the rental lease and will consider your application despite your poor credit history.