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To get an apartment with bad credit, you'll need to do more than your average applicant. But you can still position yourself as a strong rental candidate by taking certain steps. Before we get to what those steps are, first you need to know what credit score landlords look for and why.
What Credit Score Do You Need to Rent an Apartment?
Landlords, like banks and creditors, check your credit score to determine your ability to pay your bills on time. A potential landlord will use your credit score to gauge how much of a risk you are: The higher your score, the lower your tenant risk profile, and vice versa.
A FICO® Score* of 620 is considered fair credit, and is often the starting point for landlords.
Property managers and landlords are allowed to run your credit and may deny your application based on it. Usually, however, your credit score is just a starting point. What may matter more is what's on your credit report, and how you ended up with the credit score you have.
Can You Rent an Apartment With Bad Credit?
The short answer is yes, you can rent an apartment with bad credit. However, you need to be strategic about how you secure the rental. Here's how to position yourself as the strongest applicant and get your apartment, despite your credit.
1. Pay More Upfront
Most landlords and property managers require a security deposit and the first month's rent upfront to get into a property. If you want to make a good impression, pay two or more months' rent in advance or offer a larger security deposit. This will give your landlord peace of mind while you demonstrate your commitment to restoring your creditworthiness.
Paying more in advance will also put you ahead of the rental schedule. Even if you are required to use an extra payment as a deposit upfront, keeping your payments ahead of schedule in excess of any deposits will build trust with the landlord. In some cases it can also be arranged to act as a buffer should you have financial challenges in the future.
2. Find a Cosigner
It can be difficult to ask a friend or family member to cosign your lease, but it can help you to get into an apartment. If you have someone who is willing to cosign, make sure they have good credit and a history of timely mortgage or rental payments. Last, make sure your cosigner knows what they are getting into because if you default on a rental agreement, you both will be held accountable for it.
Because cosigning presents a risk for the cosigner, make sure that you can financially commit to a rental agreement before you move forward. Failing to honor a commitment after enlisting the help of a cosigner can damage your credit—and your relationship.
3. Bring Documents and References
Your credit score is just one part of the story that makes up your consumer profile. If your score is low, submit with your application documents that tell the rest of the story and demonstrate that you are a credible applicant capable of paying your rent every month. Here's what to bring:
- Proof of a responsible rental history. Bring copies of payments you've made for your last rental, if applicable. Your previous landlord may not have reported your payments to the credit bureaus. Bank statements can prove you've been on time with your payments.
- Letters of recommendation. Request reference letters from past landlords, property management companies, employers, roommates or business associates. Make sure your reference letters are from credible sources: A letter from a friend or relative who has no experience working with you or receiving payments from you won't do much for your case.
- Paystubs as proof of employment. A landlord will likely ask for proof of employment. Try to present pay stubs that go back several months, not just a couple weeks, to show you have a steady job.
- Utility payments. Proof you've made your utility payments on time every month also shows you're reliable, dependable and consistent.
By bringing documents to your interview with the landlord, you can fill in the gaps in your credit report or balance out your profile if your score does not accurately reflect your credit history.
4. Search for Apartments That Don't Require a Credit Check
Most established property owners require a credit check before they'll rent to you. There are, however, landlords who do not require a credit check. These properties often are less desirable, but may show you can be trusted to pay your rent while you're also building your credit.
To find a place that doesn't require a credit check, start by looking for apartments on Craigslist, Facebook Marketplace or the local newspaper's classified ads. If you're patient and do a thorough enough search, you should be able to find a place where your credit score isn't part of the evaluation process.
5. Consider a Roommate
If you're trying to rent an apartment with bad credit, a landlord may be more willing to accept your rental application if you share the rent with one or more roommates. Just make sure a landlord pulls your roommate's credit report first.
Another option is to move in with someone who already lives in an apartment or property for rent. You may still have to undergo a credit check, but your payments will be lower and your roommate may still assume responsibility for the apartment. You simply pay them, and they pay the landlord. Like having a cosigner, this arrangement will be built on the premise that you'll make all your payments on time. Before entering into a subletting agreement, check your lease agreement to make sure it's allowed.
6. Readjust Your Expectations
The apartment you want and the apartment you qualify for may differ. The one you can qualify for may not have a pool, workout room or built-in cable package. It may even be on the less-desirable side of town, or could require a longer commute.
By readjusting your expectations and treating this period as a "rebuilding" experience, you will give yourself time to rebuild your credit. As a bonus, paying less for a smaller space or fewer amenities allows you to keep that extra cash in your pocket.
What Do Landlords Look For on a Credit Report?
While you're doing all you can to show potential landlords that you are a worthy applicant, you should also be aware of what they are looking at on your credit report. Even if you've used the strategies above and have rented an apartment, it's important to find ways to make your next experience smoother while also building your credit. Knowing what a landlord is looking for on your credit report and why is an important first step.
- Payment history: Creditors report your payment history every month. A landlord can look at your credit report to track your payment habits and determine whether they can expect your rent payment on time, every month.
- Rental history: If previous landlords reported your payment information to the credit bureaus, your landlord can review your entire rental history. They can also see if you have any outstanding debts, evictions or unpaid rent to a former landlord. These are red flags you'll want to settle right away.
- Debts: Too many credit cards, loans, medical bills or unpaid taxes are warning signs to landlords and property managers. If a spotty payment or rental history calls into question your ability to pay on time, too many debts call into question your ability to afford monthly rental payments at all.
- Bankruptcy status: Bankruptcies can stay on your credit report for up to 10 years. Landlords often review bankruptcies to see if the canceled debts were from previous landlords. The upside is that if your bankruptcy is already discharged, you are considered a lower risk to a landlord compared with someone going through a bankruptcy.
Your payment history, rental history, debt and bankruptcy status are all important parts of your consumer profile. Landlords and rental companies will weigh all these factors to determine whether a tenant-landlord relationship makes sense.
So before you apply, take the necessary measures to improve your credit and thus improve your chances of approval. Here's how to do it.
How to Improve Your Credit Score Before Getting an Apartment
If you're trying to rent an apartment with bad credit and have a few months to spare, concentrate on ways you can improve your credit score. If renting an apartment is your focus, these are the most important steps to follow in the months leading up to applying.
Pay all bills on time: Payment history is the most important factor in your credit score, so making all your payments on time every month will help your score improve and show a strong credit history. Creditors and landlords like to see consistent payments over a long time.
Pay down your debts: Do you have credit card debt? What about an old student loan? If you have time before you plan to get an apartment, focus on paying down your debt. Reducing your balance by paying down your debt can help raise your score.
If you're serious about renting an apartment with bad credit, consider getting a free credit report from Experian so you can identify your red flags before applying and work to improve your credit for the long term.