Did you know that your credit score affects your ability to rent a house? Landlords, just like mortgage companies, want to know that you’ll make your housing payments on time. One of the best ways for them to determine that is by looking at your credit score.
So what happens if you have bad credit? Luckily, there are ways you can still rent, by using the steps below.
Get Current on Your Accounts
First, take the time to get current on all past-due accounts. No matter how many ‘good’ qualifying factors you can present, if you have past due accounts, most landlords will not rent to you. You can request a free copy of each of your credit reports here. Go over them to determine what you need to pay.
While you peruse your credit report, determine if there is any misinformation on your credit report. If there is, write to the credit bureau and let them know what is wrong. If you have any proof of the inaccuracies, it will help your situation. The credit bureau then has 30 days to investigate the issue and determine the outcome.
Think of anyone in your recent past which you have a positive financial relationship. Call upon them to write you a referral letter. It’s best if they are landlords or major companies, such as insurance or utility companies.
Along with your referral letter, you should write a letter of explanation on your own. This letter should let the landlord know why your credit score fell and what you are doing to bring it back to an average score. Include as many details as you can in the letter, such as job loss, illness, or any other emergency that could normally cause financial destruction.
Have Compensating Factors
If you know that you have bad credit, you’ll need to make up for it so that a landlord will want to rent to you. A few of the compensating factors you can provide include:
- Stable income – The longer you’ve been at your job, the more stability you show a landlord. If you change jobs frequently, this doesn’t give the landlord the feeling that you’ll be able to pay your rent. If you keep the same job, though, you are more likely to pay your rent on time.
- A high security deposit – Offer the landlord a higher security deposit than he normally requires. This way the landlord has money to fall back on should you default on your rent. Knowing that you have your own money at stake usually gives landlords a better feeling about renting to you.
- Have few outstanding debts – The more debts you have outstanding when you apply to rent a home/apartment, the less likely it is that you’ll be able to pay your rent on time. Try paying off as many debts as you can before you apply.
Get a Cosigner
The final step is to get a cosigner. Of course, the chosen person should be someone with great credit. You want their credit to outshine yours and give the landlord peace of mind that the rent will be paid. Your cosigner should be someone that you trust. It should also be someone that understands the effect of signing a lease for you. If you stop making the rent payments for some reason, the landlord can legally go after the cosigner for the payments.
The best thing you can do before you try to rent a house or apartment is look at your credit. Know what you can change and what you’ll have to explain to get around it. For example, you can’t make a bankruptcy or foreclosure go away, but you can make outstanding debt disappear by paying it off in full.
Do what you can to make your rent application as attractive as possible. If you are still worried, try finding a landlord that doesn’t pull credit. Oftentimes they will list it in their listing. You can also use the services of a licensed realtor that knows the area well as he/she should be able to point you in the right direction.