How To Get An Apartment With Bad Credit

You find the perfect place to call home. Filled with excitement, you go to apply, only to get shot down. Why? Bad credit.

In this post, we’ll look at why apartments look at your credit score, tactics to still land the apartment, and how you can even use that apartment to build better credit.

Why do apartments require a credit check?

If you’ve ever rented an apartment, you know that before they hand over the keys, they’ll ask you to provide a lot of information. Two of the most common requests are pay stubs/proof of employment and a credit check.

The paystubs make sense. The apartment wants to know that you will be able to cover the rent, the utilities, and other expenses. The other thing apartments want to know is if you have a good history of paying your bills on time; That’s where your credit check comes in.

A credit score is a number from 300 to 850. The higher the score, the better your financial record. Generally, anything over 670 is considered to be good. While many factors make up your credit score, your payment history is the major contributing factor.

Before you read further, try checking your credit score so that you know where you stand.

How do I rent an apartment with bad credit?

It depends. If you have a very bad credit score (like 300 - 500), then you will have a very difficult time renting an apartment. Here are some ways suggestions to try:

Find A Roommate With Better Credit

Sometimes your have bad credit, but if you’re young and trying to get your first apartment, you might find that you have no credit. No credit also makes renting difficult.

Apartments like it when you have a roommate because it helps to minimize the risk. If your roommate does have good credit, then that will help even more.

Get A Co-Signer

Just because you prefer to live alone doesn’t mean that you can’t have someone help you get your lease. A co-signer is someone who agrees to share responsibility for the lease agreement. If you miss a payment, the co-signer will be responsible for covering it. Of course, this requires a lot of trust.

Look For Apartments The Do Not Require Credit Checks

Your options might be limited, but there are situations where the landlord will only want proof of employment and income. Typically, professionally managed properties will require more checks, so try looking for owners who are looking to rent. Craigslist is a popular place for homeowners who are looking to rent or sublet to list vacancies. A word of caution; Just because the process isn’t as formal, don’t skip on getting a lease in writing. Remember, leases are to protect both parties.

Offer A Larger Deposit

Renters only want to review your credit score because they are concerned about missed payments, but everything is negotiable. If you know your credit history is poor, but you are on stable financial footing now, try offering to pay more upfront. For example, if the apartment requires a security deposit of 1-month, try offering 3-months.

To build even more confidence, you should be prepared to show other evidence of being financially responsible. If you have a savings account with a high balance, then bring proof. Anywhere you can demonstrate financial responsibility will help you negotiate.

Be Honest And Bring References

We all make mistakes. Instead of trying to hide bad credit (which you won’t be able to do), just be upfront and ready to speak to it. If there was a reason for a string of late payments, then explain why that happened. Once you’ve done that, be prepared to show how that situation won’t occur again in the future. A great way of demonstrating responsibility is to bring references from friends, family, and employers. Even better, get a letter from a prior landlord that spoke to what a great tenant you were.

Another way to help put the property manager’s mind at ease is to offer to set up automatic payments.

Can paying rent help build my credit score?

If you have poor credit, then you should be actively working to improve your credit score. As we already discussed, a primary way of doing this is to pay your bills in full on or before the due date. Unfortunately, your biggest bill (your rent) doesn’t usually get reported to the credit bureaus.

You can fix this. First, ask your landlord to report payments to the credit bureaus. If they say no, consider using a service like RentTrack. You will pay a small monthly fee, and you will need to pay your rent electronically through them, but they report your payment history to all three credit bureaus.

Why is this option smart? Consider that the only other way to build credit is with debt. You have to take out a loan or have a credit card. The interest rates on both are huge, much higher than the monthly fee to pay for a rent program.