How to Rent an Apartment With Bad Credit: 5 Steps to Boost Your Chance of Success
Renting an apartment can be an exciting life event. However, if you have a less-than-stellar credit history, you might be worried about your ability to secure an apartment rental. The good news is, having a bad credit score doesn’t necessarily mean you’re out of luck.
In this blog post, we’ll explore five steps you can take to help boost your chance of renting an apartment with bad credit.
How to Rent an Apartment with No or Poor Credit
1. Put a higher security deposit down.
A lot of landlords require a security deposit equal to the first month of rent. But if you have a low credit score, offering a larger security deposit upfront might show a prospective landlord that you are serious about maintaining the property.
Security deposit laws vary by state, but typically, if you don’t damage the unit or break any rules outlined in your agreement, your security deposit should be returned when your lease is up.
2. Get a cosigner or guarantor.
A cosigner is someone who agrees to take on responsibility for the rent payments if you are unable to meet them. Enlisting the help of a cosigner with a strong credit history can significantly improve your chances of being approved for an apartment.
A cosigner can live in the unit, but a guarantor cannot. A guarantor vouches for you to a landlord, and must pay your rent if you’re unable to.
Close friends or family members are typically asked to fulfill these roles. But be careful before you ask someone to share your financial responsibilities. Your negative actions, such as late payments, can hurt their credit score and put a strain on your relationship.
3. Get a roommate.
Cosigning a lease with a roommate can make renting an apartment more affordable and appealing to potential landlords. A roommate with a better credit score and financial history can help balance out your application and increase your chances of approval. Splitting the rent lowers what you pay each month, which means you may have an easier time repaying that amount.
4. Provide additional documents.
To demonstrate good payment behavior, you can supplement your rental application with additional documents that prove positive payment history, such as:
- Bank statements (with sensitive information blacked out).
- Pay stubs.
- Utility payments.
- Proof of income.
- Letter of recommendation from a previous landlord or employer.
5. Find a private landlord.
You may have better luck renting from a private, individual landlord rather than a larger property management company. These landlords are typically the property owners and select renters themselves. Their idea of what makes a good tenant may be more flexible than the requirements of a management company.
Is it Possible to Rent an Apartment with Bad Credit?
Yes, it is possible to rent an apartment with bad credit. Landlords have varying criteria and flexibility when considering rental applications. While bad credit may pose challenges, it doesn’t automatically disqualify you from finding an apartment.
How Do I Check My Credit Score?
Before you start your apartment hunt, run a credit check on yourself to understand exactly what a prospective landlord might see.
You can get a free copy of your credit report from the three major credit bureaus (Experian, Equifax and TransUnion) once a year via AnnualCreditReport.com. Review the report for any errors and take steps to correct them.
Your FICO score can be accessed for free online through some bank account providers. Experian also lets you check your FICO score for free.
Scoring models vary slightly between the different credit bureaus. According to FICO, a poor credit score is under 580, a fair credit score is 580 – 669, a good credit score is 670 – 739, a very good credit score is 740 – 799 and an exceptional score is 800 and above. Typically, landlords look for a score in the fair range and above.
Beyond the score itself, delinquencies on your credit report could pose a red flag to prospective landlords. These include:
- Evictions.
- Bankruptcies.
- Foreclosures.
- Late payments.
- Credit card debt.
- Loan defaults.
- Auto repossessions.
Why Is Your Credit Score Important When Looking for an Apartment?
Your credit score serves as a reflection of your financial responsibility and ability to meet your obligations. Landlords use this score as an indicator of your likelihood to pay rent on time and fulfill other lease terms. A higher credit score can make you seem like a responsible tenant to potential landlords.
How to Build Your Credit Score
While it may not yield immediate results, actively working to build credit is a smart long-term strategy. Timely payments on your existing debts and responsible use of credit can gradually raise your credit score over time.
Make on-time payments. Consistently make payments on time for your existing debts, including credit cards, loans and utility bills. Timely payments demonstrate reliability and contribute positively to your credit history.
Reduce credit card balances. High credit card balances relative to your credit limits can negatively impact your credit score. Aim to reduce your balances to improve your credit utilization ratio.
Avoid opening new credit accounts. Each time you apply for new credit, it can have a temporary negative impact on your credit score. Limit the number of new credit applications to avoid unnecessary dings to your score.
What Do Landlords Look For Besides a Good Credit Score?
In addition to credit score, landlords may look for:
- A clean background check.
- A positive rental history with no previous evictions.
- A gross monthly income (income before taxes) of at least three times the monthly rent.
DISCLAIMER: This content is for educational and informational purposes only, and is not intended as financial, investment, or legal advice. You should conduct your own research and seek the advice of a licensed professional who can address the specifics of your situation.
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