When it comes to housing, having bad credit can be an issue. Not only does having bad credit make it more difficult to get a mortgage to buy a house, it can also cause problems when it comes to renting.
While it can be more difficult to rent with bad credit, it’s not impossible. In fact, there are several techniques outlined below that will help you rent even if your credit is less than desirable.
Why Your Credit Score Matters When Renting
It’s important to keep in mind that these days most landlords will pull your credit report. Having a couple of blemishes on your credit report most likely won’t be an issue. However, if you have multiple negative items such as late payments, collections, or charge offs, that may be a no-go for the landlord.
Even if you have multiple negative entries on your credit report, it’s possible that the landlord will just ask you to explain what happened. In this case, you should just be honest and explain why you were late on your payments. For example, perhaps you had some medical issues and had to take time off work. Whatever it is, just be honest about the situation and the landlord will be more forgiving.
However, an explanation might not be enough, especially if you’re dealing with a larger company, such as one that owns an apartment building. These companies many times have strict rental requirements, which includes a certain credit score threshold. In this case, you could be better off looking for an individual landlord rather an a large apartment complex.
Landlords who require a certain credit score might also consider still renting if you can provide one of the following .
Reference From a Previous Landlord
The first thing you should try is getting a personal reference from your previous landlord. If possible, ask your previous landlord to write up a quick letter stating that you were a good tenant and made your rent on time and in full. As long as it’s a recent landlord, this will work in many cases.
However, if you don’t have any previous rental history, or you are unable to get a letter because you were either late on your rent payments or even evicted, this isn’t an option. In this case continue to the next step.
Offer a Larger Deposit
Another option available to you is to simply offer a larger deposit. It’s common for landlords to require the first and last month’s rent. Start out by offering an additional month’s rent and see if they are willing to negotiate.
One thing to keep in mind here is that not only will you actually need the additional money, but you’re also giving it to the landlord for an extended period of time. Normally this wouldn’t be an issue, but keep in mind that it’s not uncommon for landlords to find reasons to keep your deposit after you move out. In other words, by providing a larger deposit, you’re also increasing the risk of not getting that money back.
Get Somebody to Co-Sign
The easiest way to get a rental when you have bad credit is to find a friend or family member who has good credit and ask them to co-sign on the lease. This type of agreement usually works best with larger companies because they are used to dealing with this situation and have a system in place to facilitate a co-signer. That said, it’s not unheard of for an individual landlord to accept a co-signer.
As always, be careful when approaching friends and family about co-signing on a lease. Even if they are eager and willing, be very aware that they are putting their financial situation on the line in order to help you out. You could easily strain or even ruin a relationship if it, at some time in the future, falls on them to pay your rent.
Improve Your Credit Score
Improving your credit score is the preferable route because it’s a permanent solution. In other words, when you improve your credit score, you’re setting yourself up to never have to deal with these types of situations again.
Most people think that improving their credit score takes months and months. The truth is, since you usually don’t need a perfect credit score to rent, you only need to focus on removing a few of the negative items on your credit report. This can be done in a matter of weeks if you know what you’re doing.
I’ve written extensively on how to remove negative items from your credit report. I’ve also gone into what you should do after you have removed negative items in order to start rebuilding your credit. Everything you need to get going with credit improvement can be found in this article.