According to a recent report by Fico, a total of 43.4 million people have a credit score of 599 or less. For those hard working Americans, getting an apartment with bad credit, conducting many other basic financial transactions is difficult if not impossible.
The reasons for bad credit can be many, but often include:
- Unpaid medical bills
- Delinquent taxes
- Too much credit card debt
- Large student loan balances
- Job loss
Regardless of why you have a poor credit score, getting an apartment in any city — from an affordable place like Bloomington, Indiana to expensive New York City — with bad credit can certainly be an issue.
Landlords regularly check the credit scores of prospective tenants, and if they have a lot of qualified applicants, those with less-than-perfect credit can quickly be eliminated. For whatever reason, if you are interested in getting an apartment with bad credit, there are some things you can do to improve your chances.
Clean Up the Credit You Do Have
If you have had a major negative event like a foreclosure, your credit score can rapidly drop by 100 points or more. This isn’t the time to ignore your issues, however, as there could be other items that are causing your score to drop even further. According to the FTC, 20 percent of Americans have credit reports that contain mistakes, and these errors can lead to lower scores. Even if you had a devastating economic event occur, check your report and dispute any errors as these could be making your score even worse.
Find Apartments with Local Owners
If you are intent on getting an apartment with bad credit, look for rentals that are locally owned. If you merely apply to big complexes, you may find that there are rules in place that regular employees just cannot override. If the place you are looking for requires a credit score of 620, and yours is 615, you may be out of luck since large bureaucracies are not equipped to deal with individual situations. You can beg and plead to the local representative, but if a computer rejected your application, no one may be willing to help you.
Even if you have some credit issues try to find a suitable residence that has local ownership. In this situation, you may be able to speak directly with the owners. If you have sufficient income, and if your credit problems appear to be over, you could convince a local owner that you are a better credit risk than your score shows.
Offer to Pre-pay Rent
Even with a bigger rental complex, you could offer to prepay some of your rent to persuade the owners that they will not have a problem collecting rent from you. If you can raise the cash, offer to pay the first three months’ rent plus your security deposit up front. If you can show a steady income, offering to prepay can be another reason to persuade a landlord to say yes instead of no.
Get a Co-signer
A co-signer is someone that makes themselves responsible for your rent payments if you don’t make them. If you have had a credit issue and are intent on getting an apartment with bad credit, the use of a co-signer can solve your problem. Always remember, however, that your co-signer will have to remit the payments if you cannot, and their credit can be seriously dinged if they don’t pay your rent.
Assemble Good References
Not everyone in the rental business is cold-hearted and uncaring, and if you can show a prospective landlord that you are less of a credit risk, you can be successful in getting an apartment with bad credit. Work and personal references along with a good job can certainly help convince someone to rent to you.
Get Another Job
Approaching a landlord with a strong employment picture can definitely put points in your favor. Even if you have a credit score in the 500s, some great check stub history that shows you make more than enough money to cover the monthly rent can help put a landlord at ease.
Set Up Auto-pay
Some landlords, especially non-corporate ones, get really antsy at the first of the month when rent is due. The last thing they want is another problem child that they have to chase for rent every month. If your credit has been dinged and your potential landlord is worried about collecting the monthly rent, offer to set up auto-payments where the rent can be automatically deducted from your bank account each month on a designated day. Once a few months have passed and your payments have been credited, you will get off the danger list.
Get a Roommate
Even if you like living by yourself, if it becomes impossible to get an apartment because your credit is a problem, consider getting a roommate with a good credit history. If you’re lucky, the application can be primarily in your roommate’s name, they can be responsible for the rent, and you can pay them. This may get you in the door, and after a while, you will have a better track record to present to other landlords.
Consider Buying a Home Instead
This may seem counter-intuitive, but it isn’t in some cases. If you are a veteran, you can be approved for a VA loan that will allow you to purchase a home with a very low down payment and with a low credit score. Of course, there are always hoops to jump through, but this can be a way to solve your problem.
Also, in some states, deals like contract for deed can work. In Minnesota, for example, a surprisingly large percentage of homes are sold this way, and there are companies—blessed by the government—that specialize in these deals. Be careful of scams, however, as they are somewhat prevalent in the contract for deed industry.
The task of getting an apartment with bad credit is not a pleasant one, but you should not give up merely because you have encountered problems because of past difficulties. There are positive steps you can take that include repairing your credit, boosting your income, offering to pre-pay, setting up auto payments and more. Bad credit, although annoying, need not necessarily stop you from getting the apartment you want.