Can I Rent An Apartment With Collections On My Credit Report?

Summary:

Renting an apartment with collections and delinquent accounts on your credit report isn’t impossible, but it does present some additional challenges. Most landlords require a credit check as part of the process when you fill out an application to lease an apartment. If you show a poor credit rating, like a debt being sent to a collection agency, a landlord may not view you as a reliable tenant. However, there are a few ways you might be able to negotiate the situation in your favor.

Debt is just a normal part of life. Most of us will at least have a car loan or a mortgage at some point in our lives, if not student loans or credit card debt as well. The problem arises when you fail to manage your debts responsibly, which can hurt your ability to get new credit or a new apartment.

Today, we’ll look at some strategies you can use to help tilt the scale in your favor as you attempt to lease an apartment. First, you should take a closer look at your credit reports so you’re aware of exactly what you’re up against before you go apartment hunting.

Be aware of your credit history

Before you even start trying to rent an apartment, it’s a smart move to take a look at your credit reports to see where you stand. In general, most landlords and property managers want to see a score of at least 600, but this can vary based on your income and other factors.

Everyone is entitled to free credit reports from each of the three major credit bureaus — Experian, TransUnion, and Equifax — so be sure to do that right away. Thoroughly go over your reports to make sure that all of the information is accurate. Accidents happen, and if you find a mistake in your credit history you can dispute it and have it removed. This can immediately improve your credit score and give you a better chance of getting the apartment.

If you don’t have the time to scan your credit information yourself, you may want to hire a credit repair company to do it for you.

IMPORTANT! One of the best ways to view your free credit reports is through AnnualCreditReport.com, which allows you to view all three of your credit reports for free.

Tips for renting when you have a bad credit score

Even if everything is correct on your credit reports and you still don’t have a good score, there are a number of ways to improve your chances of approval for a new rental.

Be honest with landlords and property management companies

Rather than just filling out an apartment application and hoping for the best, be proactive when you meet with a landlord or property management company. Most people will appreciate you being honest about your poor credit scores without them having to ask you about it first.

This also gives you the opportunity to explain your situation and bad credit scores. For example, maybe you missed rent payments for a few months because you were out of work following a bad car accident. You can also explain what you are doing/have done to repay the outstanding debt. Documentation proving this can also be helpful when pleading your case, says Jon Sanborn, co-founder of SD House Guys.

“To increase your chances of successfully renting an apartment despite having debts in collection is to be honest and open with the potential landlord about your credit history and make sure to provide any proof or documentation that can demonstrate you are financially responsible and capable of paying rent.”

Offer a higher security deposit

Usually, a security deposit is the equivalent of one month’s rent payment (sometimes two). As a show of good faith, you could offer the landlord or property manager three or even four months’ rent for your security deposit. The higher deposit will show a greater commitment to your financial obligations as well as provide some extra security for the landlord.

Explain the situation to your potential landlord or property manager, provide proof of payment plans that you have in place, and offer to provide a larger security deposit than normal. This can show that you are responsible and willing to take ownership of your financial situation.” — Shaun Martin, CEO of The Home Buying Company

Provide letters of recommendation

If you want to lease an apartment with less-than-stellar credit, it may help to bring letters of recommendation from people who can vouch for your financial responsibility. While a character reference from a friend or family member might be helpful, you’re probably better off getting letters from previous landlords or your employer.

The former landlord or property manager can confirm that, regardless of your financial situation, you always made paying rent a priority. An employer can verify your employment stability and salary, or even mention that you’ve recently gotten a promotion or received a raise.

Pro Tip

Mom-and-pop landlords may be more sympathetic to these letters than large property management companies, who may have strict requirements to follow. That said, it still doesn’t hurt to come prepared. These endorsements from property managers or employers could be the difference between you being able to rent an apartment or not.

Get a co-signer on the lease

If your credit history is poor and other attempts to sway landlords or property managers to rent an apartment to you have failed, you may need to get ask someone to cosign your loan application. You can ask a friend, relative, or even your boss, but make sure that it’s someone with a very good credit rating.

Also, keep in mind that asking someone to cosign a loan is a pretty serious request. A cosigner acts as a guarantor on the lease, meaning they agree to make the payments if you don’t. This can put someone in an awkward position because they either have to pay your rent or their own credit score will suffer as a result of nonpayment.

Cosigners aren’t just helpful on apartment leases. If you’re having trouble getting an auto loan or unsecured personal loan, a cosigner could help you receive these loans as well.

Look at smaller rental properties

If you apply to rent an apartment at large apartment complexes, you’re pretty much guaranteed to have a credit check. This could severely hurt your chances of renting if you have problems on your credit report such as outstanding debts, collections, or unpaid medical bills, for example.

You may have better luck with a smaller property owner who may not check your credit or may have less stringent requirements.

Tips to achieve a good credit score

While bad credit is a problem — and can certainly hurt you in the rental process — it’s extremely common and very correctible. There are lots of ways to improve your credit score and you can start right away.

  • Get a copy of your credit report from each of the three major credit bureaus to check for accuracy and dispute anything that’s wrong
  • Always make on-time payments — payment history has the biggest impact on your credit scores
  • Pay down your balances to reduce your debt-to-income ratio (DTI)
  • Open a secured credit card
  • Become an authorized user on someone else’s credit card

Overall, Sanborn advises you to stay on top of your debts and in close communication with your creditors.

“You should make sure all of your debts are up to date and in good standing,” he says. “You could also try negotiating with your creditors or making payment arrangements with them so that the debt is paid off as quickly as possible. Paying down any outstanding debt will help to improve your credit score and hopefully increase your chances of being approved for an apartment.”

Pro Tip

“The best course of action if you have debts in collections and are applying for an apartment is to be honest and up front. Explain the situation to your potential landlord or property manager, provide proof of payment plans that you have in place, and offer to provide a larger security deposit than normal. This can show that you are responsible and willing to take ownership of your financial situation,” says Shaun Martin, CEO of The Home Buying Company.

FAQs

How long does an apartment collection stay on your credit?

If your debt has been turned over to a debt collector because you’ve failed to pay rent, it could stay on your credit report for up to seven years. In fact, most negative information generally stays on your credit reports for seven years, although bankruptcy can remain on your credit history for as long as 10 years.

It’s important to note that many landlords and property managers don’t actually report your failure to pay rent to the credit bureaus. It’s typically when your debt is sold to a collection agency (meaning the property owner essentially gave up) that your delinquency will be reported on your credit.

For this reason, it’s a good idea to communicate with the landlord or property manager about your missing payments and your intention to make good on what you owe. Most landlords are more interested in recovering the lost funds rather than sending debt collectors after you, so trying to repay your debts and staying in contact can help you avoid negative credit reporting.

How do I get an apartment collection off my credit report?

If you’ve never repaid your missing rent, there’s not a lot you can do but wait until it’s phased out of your credit reports. However, if you did pay the money back in full, or settled it, you may be able to get the negative reporting taken off your credit history.

Simply write a letter to the creditor or debt collection agency, identify the debt, remind them that it has been paid, and request them to remove it from your credit report. They aren’t required to take it off, but if it’s been paid they might do it. You could also hire a credit repair company to negotiate on your behalf, but it will cost you.

What is a debt validation letter?

If a debt collector contacts you, they’re also legally required to send you a letter verifying the details of the debt. If they don’t, you may not be certain that the debt is even real, if it’s for the correct amount, or if it’s exceeded the statute of limitations. This is why it’s important to make sure you get a debt validation letter that includes the following information.

  • The creditor you owe money to
  • How much you owe
  • How old the debt is
  • A statement that agrees to respond to requests for more information within 30 days
  • A statement that you have a 30-day opportunity to dispute the debt
  • A statement that the debt is assumed valid if you don’t respond within 30 days

It’s important to keep track of all debt collection documentation so that you don’t accidentally pay a debt that’s not even yours or fall victim to a debt collection scam.

Key Takeaways

  • The ability to rent an apartment can be severely impaired if you have a bad credit score or debt collection on your report.
  • Explaining your situation to the prospective landlord may help smooth the rental process. However, you might also need to take further action such as getting a cosigner or offering a bigger security deposit.
  • Check your credit report regularly to keep on top of your scores and look for any mistakes.
  • Making on-time payments is one of the best ways to keep your credit in good standing.
View Article Sources
  1. A Summary of Your Rights Under the Fair Credit Reporting Act — Consumer Financial Protection Bureau
  2. Fair Credit Reporting Act — Federal Trade Commission
  3. Free Credit Reports — Federal Trade Commission
  4. How to Get Out of Your Apartment Lease in 5 Steps — SuperMoney
  5. Does Breaking a Lease Affect Your Credit Score? — SuperMoney
  6. How Long Does an Eviction Stay on your Record? — SuperMoney
  7. Is FICO The Only Credit Score I Need To Worry About? — SuperMoney
  8. The 11-Word Phrase To Stop Debt Collectors — SuperMoney
  9. How To Negotiate A Debt Settlement – Pros and Cons — SuperMoney
  10. Credit Saint Credit Restoration — SuperMoney