You may know having bad credit can disqualify you for credit cards or loans, but did you know it can also impact where you live?
When you apply to lease a rental property, most landlords run a credit check. This may sound like an invasion of your privacy, but it helps landlords make sure their future tenants will actually pay the bills.
If they discover you have bad credit, they may decide you aren’t worth the risk.
Here are some tips to having your lease approved when you’re renting with bad credit.
1. Rent from individuals, not companies
Many rentals, especially apartments in large complexes, are owned by property management companies with strict policies. I learned about their inflexibility firsthand when I lived in an apartment owned by a national company many years ago.
I tried to get out of a lease early due to a job change, and despite being a stellar tenant, I was denied any leniency due to strict corporate rules.
I moved to a duplex owned by an individual landlord who was flexible with payment and policies. If you made a good first impression and had solid personal references, he wouldn’t run credit checks on new tenants.
If you have bad credit, consider trying to rent from an individual landlord or even a very small company, which is likely to be more flexible and willing to work with you. Note that you may be asked to provide proof of income in lieu of a credit check.
2. Get references from previous landlords
Even if you have bad credit, do you have a history of being a responsible tenant and paying rent on time? Get a previous landlord to write a letter of reference for you.
If your potential new landlord says they’ll run a credit check, let them know upfront your credit needs improvement (explain why if you want) but you have a reference letter from your previous landlord attesting to your trustworthiness as a tenant.
A letter from your bank or employer could help, too. According to About.com, if your credit report shows any unpaid balances, especially for rent or utilities, “pay them off and get the business to write a letter or print a statement showing the account has been paid in full.”
3. Try for a shorter lease
If your potential landlord is skeptical of your bad credit, experts recommend that you suggest starting off with a shorter lease. Ask your landlord if you can start off with a lease of just three or six months to prove you can pay on time.
If you do so, hopefully they will renew the lease for longer when it ends. If you do end up making late payments or missing payments, you can move out after the short lease ends and they won’t have to worry about evicting you.
4. Use a co-signer
If you can’t find a landlord who will rent to you on your own due to bad credit, they may accept your application if you have a co-signer. This can be a family member or friend with good credit.
According to Realtor.com, “A co-signer goes on the lease with you, and while they won’t live in your rental, they will be responsible for paying your lease if you default. If you aren’t sure you can pay the rent on time each month, you may put your co-signer at risk.”
Tread carefully here, as you may damage this relationship (and both of your credit scores) if you can’t keep up your end of the bargain.
5. Offer concessions
Do what you can to make the decision easy for the landlord.
If they’re concerned about your credit, offer to pay more than the required security deposit as a symbol of good faith. If they say they are looking for someone to move in as soon as possible, offer to move in immediately even if you would rather have two weeks.
Now is not the time to ask for special favors. It’s a mistake to ask for special circumstances like paying your security deposit over time.
Instead, cater to the landlord’s needs and compromise. You want the landlord to say yes to your application despite your bad credit.
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