Life can be a bit of a challenge. It’s even more difficult with a bad credit score. You can be denied when trying to take out loans, open bank accounts and even get a date. Bad credit can also make trying to rent an apartment seem nearly impossible.
Many businesses and financial institutions review your credit to determine if it’s in their best interests to allow you to borrow money. Landlords are very similar. They want to make sure they limit their risk. A consumer with bad credit may not yield great benefits to the lender or landlord.
While you’re certainly in better financial shape if you have good credit, there are still ways for you to find a suitable home if you have bad credit.
Before we dive into steps to renting with bad credit, you need to understand what’s considered poor credit.
What Constitutes Bad Credit?
New and poor credit scores are normally between 300 – 579, while the highest credit score is around 850. A low credit score indicates you have either just begun to build your credit or have had some negative remarks on your credit report. Negative remarks made on your credit report are correlated with your financial decisions, such as not making payments on time and the amount of debt you have.
Unfortunately, the higher your credit score, the better the financial assistance you may receive will be. Landlords want to make sure you are reliable and will make your payments on time, every time. This is why your credit score can play a large role in the application process.
This may also be a great time to review your credit report. If you have negative remarks on your report that are inaccurate, you should have them corrected. Some credit report errors can be cleared up right away, and others may take more time to reconcile.
While not always effective immediately, it may improve your chances of finding a better apartment if you can explain the errors on your report to your potential landlord. But you need to be prepared with proof. For example, if your credit report says you missed a payment, bring the payment confirmation when applying for an apartment.
Factors to Consider When Renting with Bad Credit
You may be able to rent an apartment with bad credit, but there are still a few factors you need to consider before moving forward.
You May Have to Pay More Upfront
This could be in terms of your security deposit or even paying a couple months in advance. Let’s say you don’t have a rental history. This could be a red flag for landlords. It may put them at ease if you agree to pay the first few months in full before moving in.
Increasing your security deposit is another option. This route is more enticing to the landlord because it adds an extra bit of financial security in case you were to back out of the lease.
Avoid Apartments That Require Credit Checks
This seems pretty obvious, right? If you have bad credit, only apply to places that don’t require credit checks. You may find that your options are limited, but you can start by checking out websites such as Craigslist or the classifieds section of the newspaper. Many owners place advertisements in these sections and usually clarify whether or not they require a credit check.
Budget Extra Time for Your Apartment Search
If you have poor credit, you may want to factor in additional time for your search. Finding a suitable apartment that will accept your application could take time.
You don’t want to be put in a situation where you have to accept a higher rent payment because you’re out of time and have to move. The more research you do, the more options you will have to make the best decision possible.
Options for Renting with Bad Credit
Don’t get discouraged! There are plenty of options for renting an apartment with little to no credit. It may just require a little more effort.
Seek a Co-Signer for Your Contract
If you feel that your credit score is unsatisfactory, find someone to co-sign with you. Considering you believe your own score isn’t very good, it might be difficult to find someone to co-sign with you, but it’s worth a shot.
If you go this route, keep in mind that if you miss rent payments, the co-signer is liable for your payments. This could put negative remarks on the co-signer’s credit if something were to go wrong. This is the risk co-signers take when they accept this responsibility.
Negotiate Your Contract
Remember, everything is negotiable. Landlords want to fill their space. The longer it remains vacant, the longer they aren’t receiving funds for the property.
Before you begin negotiations, call the landlord or rental office and understand what’s required in order to rent the apartment. By understanding the requirements, you can better negotiate terms for the contract. Doing your homework in advance could give you the extra information needed when negotiating your contract.
Get Letters of Recommendation
Just like with references for a job, it’s beneficial when people can vouch for you. Contact people with whom you’ve had a successful financial relationship, such as your bank or previous landlords. Obviously, don’t list any references that you missed payments with since that might not help your case.
This shows the landlord that you are willing to go the extra mile to get the apartment.
Options for Renting with Bad Credit, No Co-Signer and Low Income
If no one will come to your rescue to write a reference letter or co-sign your contract, there are still several options you can pursue to find the apartment of your dreams.
Search Outside the City Limits
Apartments within the city are more sought after than outside the city limits. Look for different neighborhoods that may not be as competitive. If you are OK with commuting a little bit farther to work, you may be more successful.
Consider a Roommate
This may not be your first choice, but it could give you time to build your credit and find another apartment in the near future. If you can find a roommate with good credit, have their credit score pulled instead of yours. Then you could sublease directly from your roommate.
The other option could be to move in with someone who is seeking a roommate. They may have an extra bedroom they are trying to fill to make a little extra cash or subsidize their rent payments. You could ask your friends and family or search on a website, such as Craigslist.
Having poor or no credit is not the end of the world. You will be able to find an apartment to meet your needs. In the meantime, work toward increasing your credit and maybe next time you won’t have to jump through hoops to get the home or rental of your dreams.
Have any of you tried renting an apartment with bad credit? What difficulties did you have in the process? Let us know in the comments section below!
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