Renting an apartment with bad credit is no easy task. Many large apartment complexes owned by corporations require credit checks and will refuse applicants who do not meet their standards.
Even if you have the income to pay for the apartment, you could still be refused if your credit score is too low. Here’s how to get an apartment when your credit score is scaring off landlords.
One way to get an apartment with poor credit is by avoiding credit checks altogether. Many privately-owned homes and apartment buildings do not look at credit, preferring instead to find tenants with good references from previous landlords. You can find advertisements for privately-owned rentals in the classified section of your newspaper, on sites like Craigslist and Rental.com, as well as through local real estate agents.
Many local homeowners and condo owners rent out their properties because they are having trouble selling them in the current real estate market, so you might be able to find a nice property at a reasonable rate, provided you are a good tenant and are willing to keep the place clean and orderly.
Getting letters of recommendation and submitting them with your applications can help convince landlords that you’re a reliable renter. Holly Johnson, a landlord and credit expert at The Simple Dollar, said, “I have rented to people with bad credit multiple times, mostly because they were able to illustrate their ability to pay their rent and had excellent references. I put references from other landlords above all else when it comes to finding a prospective tenant.”
A simple way to qualify for leases is to clean up your credit report. Get copies of your credit reports and check them carefully. You can obtain copies from the three major credit bureaus: Experian, TransUnion and Equifax. You are entitled to one free copy from each per year, and you can request additional copies at a cost.
Review your credit reports and dispute any inaccurate information. Sometimes companies report a late payment incorrectly, or you might have been charged for something you did not purchase. If you dispute a transaction, it is up to the lender or seller to prove that you were truly late with your payment or that you did not pay a bill. If the seller or lender cannot prove this, the credit bureau will remove the citation from your report, helping boost your credit.
Once your credit reports are clean, you will be better able to determine if your reports will trigger denials from prospective landlords. If you had a few late payments to a hospital five years ago, for example, you are far less likely to be turned down by a landlord than if you had an eviction in the past year for not paying rent.
If your credit has been recently affected by a divorce or another temporary bump in the road, tell your potential landlord in a letter. If you had poor credit habits in the past that might show up on your credit report, explain that you are actively working toward correcting those behaviors. In the end, honesty is the best policy.
A cosigner or guarantor can help you qualify for a property that you might not otherwise be able to get. Kristie Santana, a personal finance coach with the National Coach Academy, said that if you “add a guarantor to your application that shows (landlords) that even if you do happen to fall behind on payments, you’ve got someone who is willing to spot you until you recover.”
If you have a parent, spouse or friend with good credit who is willing to sign for you, renting an apartment with bad credit is often much easier. “As long as the landlord is receiving payments on time every month, he doesn’t care much where it’s coming from, as long as it’s there,” she added. If you don’t have someone who is willing to cosign for you, you can use a guarantor service like Insurent.
“If you’re denied a rental due to your credit score, you could offer them more money as a security deposit to show them that you are serious about the commitment,” said Debbi King, a personal finance and life coach and owner of The ABC’s of Personal Finance.
Some larger corporations will rent to people with poor credit if they agree to pay much larger security deposits. Generally, the larger security deposit reflects how much rent you would pay during the time it takes to have you evicted for nonpayment of rent.
For example, suppose you pay $600 a month for your apartment and it takes 90 days to evict a tenant in your state. Expect to pay around $1,800 in additional security money upfront, as the landlord will want that money in escrow in case you default on payments.
Landlords fear having tenants who won’t pay up. If you can remove that fear, they’ll be more liable to rent to you. King said she paid one years’ rent upfront when she was rebuilding her credit after a bankruptcy. If a years’ rent is too much for you to afford, offer to pay one or two additional months ahead of time.
You should also be upfront with your landlord about how much you earn annually. In a letter, explain your earnings and show proof of income for yourself and all other tenants. If you are a contractor or freelancer, show proof of income for the past one to two years to show your earnings are regular and reliable.
As you apply for rental properties, keep in mind that any potential landlords reviewing your application have no idea whether you are a reliable tenant. With letters of recommendation, bigger security deposits and proof of income, you can incentivize landlords to accept your application.
This article originally appeared on GoBankingRates.
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