Real talk: Many landlords now rely on a credit check to vet potential renters, especially in competitive markets. (Just try hunting for an apartment for rent in Chicago, IL, and you'll feel the pinch of a poor score.) Like it or not, your credit history can be used to assess how much of a financial risk you may pose to a landlord. Are you going pay your monthly rent on time, or does your credit report indicate that you have a history of paying bills late?
But there's hope. Many renters lease apartments with bad credit (or no credit at all, if you're a new college grad, for example) and work to boost their scores while renting. So how can you land an apartment if your score is lackluster?
Here's how to rent with bad credit:
1. Find a guarantor or co-signer. This is both the easiest and most complicated approach: Ask a parent, trusted friend, or relative with good credit to co-sign the rental application with you. In theory, it's an easy solution, because while you'll be the only one living in the apartment, your co-signer agrees to cover the payments in the event that you default on your rent. This can provide a landlord the extra reassurance they need. Of course, it's complicated because someone else is on the hook for your behavior. You don't actually want your co-signer to be forced to make payments for you, so be sure the monthly rent is an amount you can afford comfortably. Be realistic about what might happen to your relationship with your co-signer if you default on the lease.
2. Be honest and show progress. Sometimes, bad credit isn't a reflection of bad money management. You may have lost your job, suffered from medical problems, or experienced another financial setback that was out of your control. If this is the case, be upfront about it — before the landlord even runs your credit check. Your willingness to admit and own up to your bad credit is a point in your favor. It also gives you the opportunity to talk about the steps you've taken, and are currently taking, to improve your credit score. Whether it's a proven track record of paying your bills on time or references from recent landlords, this will show your prospective property manager that you're responsible and committed (even if your credit is less than perfect).
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3. Pay rent in advance or increase your security deposit. Bad credit makes landlords nervous because it indicates that since you defaulted on past bills, you might default on the rent. By paying a month or more in advance or offering a two-month security deposit, you can alleviate their concerns. Not only does this show your commitment, but it also provides them with extra cash that can cover some of the losses and damages should you skip out on the rent. (Which, of course, you won't.)
4. Get a roommate. Willing to share your living room and kitchen? Find a roommate. If the landlord will allow just one person to sign the lease, see if your roommate is willing to sign it solo. (Alternatively, try to move in with a roommate who is midlease and can add you without a credit check.) This way, the person on the lease is the one with more solid credit. Roommates come with another benefit: you'll be able to share the bills. By reducing your financial burden, you can continue to pay down debt and repair your bad credit faster — a true win-win!
5. Show solid income and offer to pay via direct deposit. Even if your credit history is a little shaky, being able to show a history of regular, consistent income can go a long way toward making a landlord feel better about you. When applying for an apartment, have proof of income ready, such as recent pay stubs, tax returns, and even a letter from your employer verifying your employment status and income. Offering to have your rent automatically deducted from your bank account can also help.
6. Compromise by paying a little more. Some landlords charge additional "risk" fees if your credit score is poor. You may want to consider taking the hit if you really love the apartment, or if you need to quickly find a place to live. If you're dealing with an individual property manager who is inclined to deny your application, you may be able to negotiate a slightly higher rent as a gesture of good faith.
7. Bring recommendations. You'd bring letters of recommendation for a job application; why not bring the same when you're trying to rent? Letters of recommendation can reassure a potential landlord that you're a responsible person who won't cause them any problems. Ask for letters from current and previous employers, landlords, and even past roommates who can vouch for your character. Even if your previous landlords were only for short-term rental arrangements, their endorsements can hold weight.
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