To get an apartment with bad credit, you’ll have to go above and beyond the average applicant. However, by taking certain steps, you can still position yourself as a strong rental candidate. Before we get into those steps, you should understand what credit score landlords look for and why.
What Credit Score Do You Need to Rent an Apartment?
Landlords, like banks and creditors, look at your credit score to see if you can pay your bills on time. Your credit score will be used by a potential landlord to determine how risky 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 frequently used as a starting point by landlords but it is not rare to see approvals at 570 and above.
Property managers and landlords have the authority to check your credit and may deny your application based on it. However, your credit score is usually just a starting point. What’s on your credit report and how you got your credit score may be more important.
Can You Rent an Apartment With Bad Credit?
The short answer is that you can rent an apartment even if you have bad credit. However, you must be strategic in your approach to securing the rental. Despite your credit, here’s how to position yourself as the strongest applicant and get your apartment.
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 of 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 or hard inquiry, 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 everything possible to convince potential landlords that you’re a worthy candidate, you should also be aware of what they’re looking at on your credit report. Even if you’ve used the strategies outlined above and have rented an apartment, it’s critical to look for ways to improve your next experience while also building your credit. The first step is to understand what a landlord looks for on your credit report and why.
- Payment history: Every month, creditors report your payment history. A landlord can use your credit report to track your payment habits and determine whether they can count on you to pay your rent on time, every month.
- Rental history: If previous landlords reported your payment information to credit bureaus, your landlord has the right to review your entire rental history. They can also look into any outstanding debts, evictions, or unpaid rent to a previous landlord. These are red flags that you should address right away.
- Debts: Too many credit cards, loans, medical bills, or unpaid taxes are red flags for landlords and property managers. If a shaky payment or rental history calls your ability to pay on time into question, having too many debts calls your ability to afford monthly rental payments at all into question.
- Bankruptcy status: Bankruptcies can remain on your credit report for up to ten years. Landlords frequently examine bankruptcies to determine whether the canceled debts were from previous landlords. The advantage is that if your bankruptcy has already been discharged, you are considered a lower risk to a landlord than someone who is filing for bankruptcy.
Your payment history, rental history, debt, and bankruptcy status are all critical components of your consumer profile. All of these factors will be considered by landlords and rental companies when determining whether a tenant-landlord relationship makes sense.
So, before you apply, take the steps necessary to improve or repair your credit and, as a result, your chances of approval. Here’s how to go about it.
How to Improve Your Credit Score Before Getting an Apartment
If you’re looking to rent an apartment with bad credit and have a few months to spare, focus on ways to raise your credit score. If you’re looking to rent an apartment, these are the most important steps to take in the months leading up to applying.
Pay all bills on time: Because payment history is the most important factor in your credit score, making all of your payments on time each month will help your score improve and demonstrate a strong credit history. Creditors and landlords prefer consistent payments over a long period of time.
Pay off your debts: Do you owe money on your credit cards? What about a previous student loan? If you have time before looking for an apartment, prioritize debt repayment. Paying off your debts and reducing your balance can help you improve your credit score.
If you’re serious about renting an apartment with bad credit, get a free credit report from annualcreditreport.com so you can identify red flags before applying and work to improve your credit in the long run.