Getting Out of Hot Water and Into a Home

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From bad credit to bankruptcy, if you're a renter with financial troubles, you're not alone. According to a recent survey of Rent.com's property managers, 81 percent have seen a decline in the creditworthiness or credit score of prospective renters. Even so, "given the current economic climate, some property managers are willing to bend the rules and make concessions to keep their units occupied," says Peggy Abkemeier, president of Rent.com. In fact, the survey shows that

From bad credit to bankruptcy, if you're a renter with financial troubles, you're not alone. According to a recent survey of Rent.com's property managers, 81 percent have seen a decline in the creditworthiness or credit score of prospective renters. Even so, "given the current economic climate, some property managers are willing to bend the rules and make concessions to keep their units occupied," says Peggy Abkemeier, president of Rent.com. In fact, the survey shows that 43 percent of landlords have relaxed their credit policy standards to fill vacancies.

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When you have good intentions, there are ways to prove yourself a worthy and dependable renter -- even if your credit record shows otherwise.

Four Things a Renter Should Never Do

It may feel like you have to tell tall tales or stretch the truth to secure a rental, but resist the urge. According to Dr. Keely Killpack, owner and CEO of the Killpack Group, a change management consulting firm based in Portland, Oregon, "Omissions during the application process ruin your credibility." Here are four things experts advise you never do when it comes to renting.

1. Don't push for a quick turnaround.

Dennis P. Fassett is the owner of Cash Flow Mercenary, LLC in Franklin, Michigan, a training company that shows people how to salvage their retirement through rental real estate and landlording. He often sees renters who want to trade cash for keys immediately. "This is a dead giveaway that someone has problems with his credit history, employment history, rental history, or all of the above," he says. "I'll take an application from someone in a hurry, but I won't shortcut the screening process ever."

2. Don't "pad" your cash, assets, or salary.

"Never bluff or try to pretend you have more money than you do or that your credit record is unblemished," says Jerrold Mundis, financial therapist and author of 'How to Get Out of Debt, Stay Out of Debt, and Live Prosperously.' "Your record will be checked and if you've lied about it, you will lose the apartment or house."

3. Don't make excuses.

Trying to play the sympathy card or plead for a fresh start won't endear you to landlords; they'll just categorize you as a high-risk tenant. Says Mundis, "Don't try to rationalize, justify, or deny the bad marks on your credit record, claiming they're everyone else's fault, not yours."

4. Don't make a roommate your only hope. Partnering with a roommate who has good credit might solve the problem of finding a place to live, but if your roommate is the only one on the lease, you're not rebuilding your own rental history, says Fassett. Likewise, Mundis adds, "Don't try to have someone with better credit take out the lease when you're going to be the primary occupant and they're not."

Five Things a Renter Should Do

If you know your credit check is coming back covered with red flags, experts offer five pieces of valuable advice to give you a better chance of landing that rental -- no matter what your credit history.

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1. Do be up-front about credit problems.

"There are many victims of less-than-perfect credit who are struggling but still responsible and trustworthy," says Abkemeier. "Be honest about why you have a low credit score, and determine what 'proof' of stability is needed to sign a lease." When you're evasive about being a less than ideal candidate, it makes landlords work harder to determine if they should rent to you as an exception, says Killpack. She recommends including a cover letter with your application, explaining the credit blemishes a homeowner or property manager will inevitably discover. If your credit problems aren't due to your rental history, explain the issue in detail, says Fassett.

2. Do pay a larger deposit or prepay rent.

Landlords may feel better about your financial security if you can afford to pay three to six months' rent up-front, says Abkemeier. That's in addition to the standard one month's rent and security deposit.

3. Do provide references.

"Despite your credit score, a legitimate letter of reference from previous landlords can go a long way in easing the mind of your potential new landlord," says Abkemeier. The letter should speak to your track record for paying rent on time. A letter from your employer showing proof of job security can't hurt either, she adds.

4. Do offer to set up automatic payments.

Landlords want to feel confident that you won't have trouble paying the rent so they can easily pay their mortgage. "Provide evidence to your prospective landlord that you will set up an automatic payment on the first of each month to pay the rent," Abkemeier says.

5. Do get a co-signer.

To ease landlords' fears, "be prepared to offer a co-signer whose credit record is impeccable," says Mundis. Co-signers do not live with you but they do sign the lease with you and are liable for paying the rent on your behalf should you default. "Some landlords will allow a co-signer," says Abkemeier, "so consider this option carefully and choose wisely."

When all else fails and you still can't land a rental, you may need to move in with family or friends to buy yourself some time to save money or, Mundis suggests, apply for public housing assistance. If you're aiming too high, you may need to lower your expectations. "There are always rentals available to people with bad credit; they're just not the kind they might want to rent," Fassett explains. "If someone with bad credit gets backed into this corner, all they can do is move to a lower quality or farther-away property until they can rebuild their rental history."

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