Tips for Qualifying for an Apartment with Bad Credit
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Credit makes the world go around. Having bad credit is never a good thing but it also doesn’t have to be the end of the world. We specialize in helping to repair bad credit so that you can live your life without the hassle that a bad credit report can bring with it.
And the unfortunate thing is that bad credit can have a far-reaching impact. One of the most obvious things is that it makes it very difficult to apply for a loan of any kind, which can mean something such as a small personal loan, a student loan through a private lender, or a mortgage loan to purchase a home.
Additionally, it can make getting credit cards a very difficult thing. Even if you do wind up getting approved, interest rates can be sky high. That is the quickest way to getting into credit card debt and it can become extremely difficult to get out of that hole.
What many don’t realize is that a bad credit score can also get in the way when you look for an apartment or another type of rental. Some landlords will look at your credit score as a way to determine if you can be trusted to pay your rent on time.
Fair or not, your bad credit score can get in the way of a lot of things. But there is good news: there are tips that can help you get an apartment or rental property even if your credit score isn’t in the best of shape.
So how can you get a rental property or apartment if you have bad credit? Here are a few tips that may be able to help your situation.
Put the Focus on Your Salary
Having a bad credit score is not something that you can necessarily deal with that day. It takes time, effort, and extra payments to get the important factors of your credit in line. But you can put a focus on your salary if you make a bit more than what the rental requires.
If you happen to make a really good income, the landlord may look past your credit score and see that you have the funds to make your monthly payment on time. A good earmark to shoot for is having an annual salary that is 40 times your monthly rent. So if your rent is $1000, a landlord might be willing to overlook a poor credit score if you can prove that your income is at least $40,000.
Keep in mind that if you do want your landlord to make a decision based on income, you will have to provide proof. Pay stubs (usually your last two) will be enough to verify your income but some landlords will take a tax return as proof too.
Another good thing to keep in mind is that if you have a quality income, you might want to showcase it through rental websites. There are some rental resumes out there where renters are able to highlight what makes them a quality renter. Things such as income, occupation, and more can all be considered to make you an ideal candidate.
Point to a Positive Rental History
Credit is not the only important factor when trying to rent an apartment. Rental history is one of the major factors that landlords will take into consideration. After all, it won’t matter if you have a great credit score or salary if you burn bridges with each landlord.
If you happen to have a great relationship with your former landlord or landlords, use them as a reference when you move. Even if you haven’t rented an apartment before, you can still lean on your strong references.
When providing references, try to lean on non-family members. They will appear to be more reliable sources that aren’t going to automatically say great things just because you happen to be related to them. A teacher or employer makes for a great reference to show how dependable and reliable you are.
Another way to add to your rental history is to start while living at home. If you pay rent to your parents or a friend, or rent out a room at someone’s house, ask if you can use those people as a reference. You can even get receipts to show that you paid your “rent” on time. Anything helps when it comes to building a positive rental history that can make landlords feel comfortable renting to you.
Get a Roommate
Even if your plan is to get a place all your own, it just may not be possible without a lot more money up front or a little extra help. And if your credit score is in a bad place, you will need to find other ways to get your landlord to believe in you.
Maybe getting a co-signer or paying more up front is not an option but perhaps asking a friend to be your roommate can work out. Having a co-tenant with better credit sign the lease with you, especially as the master tenant, can be the best way around your bad credit score.
Sure, you might be asked to provide your credit score; however, if you are the subletter, you may not have so much emphasis placed on your own score. It’s similar to a co-signer in that the other tenant will be responsible for missed rent or damages but gives them the incentive of having a place of their own too.
It is important to note that if you plan on going this route, it should be with someone that you trust and can depend on. There have been far too many instances of friends getting an apartment together only to have a fight and one of them leaves.
If this happens and one person vacates, the remaining tenant will still be on the hook for paying the rent. Sure, failure to pay or eviction will damage the former tenant’s credit but it will also hurt yours even further.
Build Your Credit
While not everyone has the luxury of time, there are some who do. If you don’t need to find a place to live immediately, there is the chance to work on your credit. Two of the biggest factors in credit scores are payment history and credit utilization.
Take some time to establish a positive payment history and to get your utilization total under 30%. It won’t take your score to an 800 overnight but it will establish a positive payment history and should bring your score up substantially in relatively short order.
If you have no credit and are looking for a place, take the time to begin establishing credit. Open up a few low-limit credit cards and make sure that you are paying your bill each month. Try not to carry a balance from month to month; pay the entirety of the balance off at the end of each month if you can afford it.
Even if you have a short credit history when you do go to apply, it can be enough to sway a landlord in your favor. Landlords tend to not be trusting of young tenants but establishing a strong start to your credit history can be enough to show that you are reliable.
Of course, it is recommended that you try to build your credit at any time. Whether you have found a place or are still looking, try to keep an eye on your credit report and how you can better it. Even a few points can be the difference that gets you an apartment.
Have Honest Communication
Your credit report doesn’t indicate the whole story. A bad credit score doesn’t illustrate how you arrived to that point in your life and not everyone is irresponsible with paying their bills. The key here is be honest with a potential landlord.
Try writing an explanation of how your credit score arrived to the point that it is at. If you have good budgeting habits, show those off and talk about how you plan to be a responsible tenant during your stay in that apartment.
Landlords can choose to waive their own requirements but it can get dicey if you happen to be dealing with a big management company. Those management companies don’t have the flexibility that an individual landlord will.
In any event, being honest about your credit history is something that can help you navigate a negative credit score. Trying never hurt anyone and you can only do good things if you try.
Have Savings in Place
This is similar to making more money than is required by your landlord. Since poor credit will make your landlord doubt your abilities and reliability financially, a strong savings account can help to sway them in your favor.
If you have a poor credit score, try showing your landlord your bank statements to show them your reserves. It is always a good idea to have both a checking and savings account as well. When showing a prospective landlord your savings reserves, you should have a few months worth of rent saved up.
By showing that you have money set aside for potential rent, the landlord may feel more comfortable with your ability to pay your rent and give them a better idea of your ability to budget and plan in a responsible manner.
Again, the goal with these tips is to show that you are responsible enough to be trusted by your landlord even if your credit is in poor shape. Use any of the tools you have available to showcase your trustworthiness.
Offer to Have Automatic Payments Set up
Of all of the tips on this list, this may be one of the best. Landlords will look very positively on receiving their rent on autopay. This gives them a guarantee that not only will rent be paid but it will be paid in a timely manner each month.
Instead of letting a bad credit score get in your way, offer to allow your landlord to deduct rent from your bank account automatically each month. This can be done through an online rental payment system or through an automated clearinghouse (known as an ACH).
The good thing about this is that even if they don’t have an online payment hub, there are other vehicles with which to pay rent online. This is a great way to help assure your landlord that your rent will be paid in a timely manner each month.
This goes hand in hand with some of the other portions of this list. You will have to demonstrate to the landlord that you will have enough cash in your account to be able to cover those automatic payments each month.
If you have had trouble paying bills, which is likely how you landed in hot water with your credit score, an automatic payment may not be the best idea. But if you can show a steady income and a strong savings account, you may have figured out the best possible avenue for renting an apartment even if your credit isn’t in good shape.
Pay More up Front
What is owed up front can vary from rental property to rental property. One of the more common terms is that you will need to pay the first month’s worth of rent in addition to a security deposit. This is to give the landlord some semblance of insurance should you wind up being a bad tenant who causes problems with the property.
With a bad credit score, the idea is to make your rental application stand out with positives in your favor. Being able to offer to pay more up front — maybe two months or more — plus the security deposit is a great way to gain favorable attention from a prospective landlord.
If you can pay in cash, that is even more attractive to landlords. Of course, it is essential that you start to pay your rent in a timely manner when that time comes and continue to do so. Just because you are able to land an apartment with bad credit doesn’t mean that you can or should be a bad tenant.
The point with paying more or having more in savings is that credit makes these necessary. With a negative credit report on your side, landlords need more proof that you are a good and trustworthy investment. They don’t want to trust their property to a person who they feel cannot pay the bills or who they will have to chase down for rent on a regular basis.
Using a Co-Signer
Should all else fail, there is another option. Find someone who you trust and who is willing to co-sign for you. Getting someone who has good credit to co-sign for you is essentially a guarantee that you are to be considered trustworthy.
This is because co-signing means that the co-signer is also on the hook for rent. Much as with a credit application or loan, the co-signer becomes responsible for the monies due as well. So if you decide to stop paying your rent, they are just as responsible for that debt as you are.
Getting a co-signer can be difficult, however. It has to be someone who you can trust and someone who trusts you. More importantly, putting that co-signer in a bad position can potentially ruin a relationship. Asking someone to co-sign and then damaging their credit can result in serious bad blood and make the relationship unsalvageable.
Whatever you decide to do, there are ways around a bad credit score when it comes to finding an apartment. Don’t assume that your bad credit will keep you out of a decent apartment; just know that it will take a little more effect to make it all work out.
Obviously, if you can keep your credit score healthy and strong, do that. Your credit score dictates a lot of things in life and can make everything difficult if it is on the wrong side of the scale. Paying your bills on time is a great way to keep your credit on track and remain trustworthy in the eyes of lenders and landlords.
But if your credit score is in some trouble, use one of these methods to get into a decent place. When you have found a place that you feel comfortable with, you can then begin to take steps towards rebuilding your credit.
Experiences in having a low credit score don’t have to be the end of the world. They will certainly make life a bit more difficult when it comes to securing a loan, applying for a credit card, or getting an apartment but they don’t have to be the end of the road.
Keep an eye on how to improve your credit score and make the necessary steps where you can. Getting your score back on track is a marathon, not a sprint. You don’t get negative marks on your account overnight and you don’t get your report looking great again overnight either.
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