Having bad credit means that you’ll probably pay higher interest rates on car loans and credit cards. But unfortunately it can also mean that you’ll struggle to secure a lease to an apartment.
Nowadays, a credit check is standard part of any lease application and a spotty credit history is a red flag for most landlords. However, there are steps you can take to ensure that you’re approved despite your lackluster credit profile. Below we outline 10 of them.
1. Be Straightforward and Honest
One of the most basic things you can do to ensure the application process goes smoothly is to be upfront and honest. If you have bad credit and it’s on the mend, you should bring it up early on in the process. This shows maturity, and that you understand your financial situation. By addressing the situation head on, you may also learn what your potential landlord will need to approve your application, whether that’s proof of employment or something more. If you wait until they discover the marks on your credit history on their own, there’s likely to be less room for discussion.
2. Tell Your Story
There are a lot of reasons people end up with marks on their credit, and it’s important to tell your story. Maybe your credit history is imperfect because you got sick, lost a job, or went through a divorce. Landlords are aware that many potentially good tenants end up with bad credit scores. Help your landlord understand why yours suffered, and explain why you’ll be able to make rent every month on time.
3. Demonstrate a Positive Rental History
If your last lease ended on good terms, request documentation from your former landlord and have it at the ready when you begin your application process. While your credit history is certainly important, it doesn’t always tell the full story. If, for example, you defaulted on a student loan or fell behind on your car payments, but have a flawless rental history, you’ll want to point this out to a potential landlord.
4. Provide Solid References
When you’re applying for an apartment, landlords are trying to understand who you are and whether it’s a good idea to enter into a long-term business relationship with you. Letters of recommendation can help them to make this decision. While letters of reference from former landlords will probably hold the most weight, you can request them from academic advisors as well as current or former employers.
5. Offer to Sign a Shorter Term Lease
In less competitive rental markets, you can offer to start out on a short term or month-to-month lease. Once a lease has begun, it can take landlords months to evict a tenant that’s not paying rent. A shorter term lease gives them the option to try out the relationship without risking a year-long headache.
6. Offer to Pay More Up Front
To alleviate potential concerns, you can offer to pay more up front. Landlords associate bad credit with risk, and a higher security deposit or advance rental payments may help to bring them reassurance. You’ll show that you’re responsible enough to save money, and that you’re willing to invest in making the lease work.
7. Get a Cosigner
One of the most surefire ways to ensure your rental application is approved is to enlist the help of a cosigner. However, this option shouldn’t be taken lightly. If you fall behind on your rent, your cosigner is legally obliged to step in and make payments on your behalf. For the sake of your relationship, you’ll want to be sure that you can afford the apartment without any assistance, and that you have a contingency plan in place in the event that you lose your job or face other financial setbacks.
8. Get an Institutional Guarantor
If you don’t have a qualified cosigner, you may also want to consider an institutional guarantor such as Insurent. In exchange for a fee equal to a small percentage of the annual rent, an institutional guarantor will guarantee the lease. With this option, there are, however, a few caveats. To start, you’ll need to check that the landlord will accept an institutional guarantor in lieu of an individual cosigner. Additionally, institutional guarantors do consider credit history, and they require decent scores.
9. Move In With A Roommate that Has Already Secured a Lease
If you’re open to shared accommodations, you can often avoid a credit check all together. There are plenty of owners and lessees looking to fill a room or two and, when it comes to sharing situations, your financials may be less important than conveying that you’ll be a quality housemate. While there quite a few places to search for shared rooms, Craigslist is still the place to start.
10. Take Over an Existing Lease
If you’re worried about qualifying for a new lease, you can look to take over one that’s already mid-term. This might mean asking friends and family if anyone they know is looking to sublet an apartment. Or it could mean searching around on Craiglist or even Airbnb for current tenants looking to get out a lease early. In this case, you’ll sign a contract with the current tenant, who may not be as strict as the landlord with credit checks, especially if he or she needs to move quickly.
Your Mileage May Vary
This guide is intended to help you with your apartment search, but it goes without saying that these suggestions won’t apply in all situations. Large property management companies, for example, are likely to be much stricter with their requirements than individual landlords. Though even the latter might not be willing to negotiate if they’ve been burned in the past. Additionally, the willingness of a landlord to take on a tenant with a less-than-perfect credit history will also depend on how competitive the rental market is in the city where you apply. In cities like Boston and New York, for instance, landlords typically receive multiple applications for every apartment they list.