How To Rent a Home With Bad Credit Score?

Article Summary:

The best way to rent a home with bad credit is to show your future landlord that you have enough financial stability to rent your apartment. This can mean showing your past rent history, getting references from previous landlords, and offering a higher security deposit.

Life happens, and when it does, your credit score may take a serious hit. After all, you need to pay for stuff, and maxing out your credit can seem like a solution. Of course, if you turn to credit to pay for something you don’t have enough money for, you might discover you also don’t have enough money to make your credit card payment on time. This means late payments. Credit reports show this, and that spells trouble for your prospects of renting a home.

Whether you aim to rent a modest apartment home or a large villa, bad credit will make the process challenging. You might wonder if it’s even a possibility. The short answer is that it is possible, and this guide will tell you how to make it happen, or at least how to give yourself the best chance of making that new home rental a reality.

To rent a home when you have low credit scores, you may need to prove that you can pay rent by getting a cosigner or guarantor. If your past rental payment history is good, a record of that history from your last property manager could encourage the new landlord to rent to you.

Bad credit doesn’t have to stop you from renting an apartment or house

A bad credit score can put the kibosh on a lot of rental units and houses that you might want. Thankfully, there are several tips, tricks, and procedures that you can use to make sure that you get the rental that you need. In the following sections, we’ll review the best tips we know. Here’s a preview:

How to land rentals with bad credit

Here are the best tips we know for getting your rental application approved despite bad credit. We’ll unpack these tips through the rest of the article.

  1. Ask landlords what would make you a good candidate
  2. Consider getting a cosigner
  3. Look up guarantor companies near you
  4. Show ample evidence that you are a great renter
  5. If your state allows it, offer a larger security deposit
  6. Dispute negative marks on your credit history before shopping for a rental
  7. Get roommates
  8. Seek out less costly rentals
  9. Seek property owners known for leniency and flexibility renters

Now that you’ve seen the tips, let’s dig more deeply into each of them.

Ask landlords what would make you a good candidate

Knowledge is power, and you always have the power to ask. The best way to ensure that you have a serious shot is to talk to your potential landlord or property management group to find out if they have a protocol in place for applicants with bad credit.

Some owners of rental property simply ban people with bad credit from renting from them. Others will ask to see copies of your bank statement, request a cosigner, or have you take out rent payment insurance.

Pro tip — When apartment hunting, make sure to tell landlords that you have problems with your credit score and ask them what you can do to compensate for your flawed credit. They will find out about your credit issues when they run a check, so there’s no point in trying to hide them. If you get assistance from real estate agents as you look for rentals, tell them about your credit issues, too.

Consider getting a cosigner

In the world of both rentals and loans, cosigners are a staple among people who want to overcome bad credit when they make a major purchase or establish a lease. A cosigner is a person who is willing to pay your rent if you can’t pay it on time.

Do you know people who would qualify to cosign (read: have good credit and sufficient income) and might be willing to help you out? Ask them and see if you get any takers. Having this kind of “backup” can help soothe the concerns of property owners.

Tip from the professionals — Not everyone is qualified to be a cosigner. A landlord may require cosigners to have annual incomes equal to 40 times the monthly rent plus whatever they pay for their own rent or mortgage. Different landlords will have different requirements, and not all landlords will allow cosigners.

Look up guarantor companies near you

Guarantor companies are starting to pop up in most major cities, and they act a lot like cosigners. The difference is that they are not helpful relatives or friends but companies you hire. They are there to offer a guarantee that you will pay your rent on time.

If you cannot pay your rent, guarantors will have to pay what you cannot. This helps reduce the risk of loss for landlords. Guarantors are a good choice if you can’t find a cosigner and live in a popular city. You may have to ask potential landlords if they accept guarantors.

Show ample evidence that you are a great renter

Don’t be afraid to show your rental history to your new landlord, especially if you’ve been great at paying your rent on time. Some property management companies will allow you to move into a rental unit based on this history.

In some cases, it can also be a good idea to discuss why you have poor credit. If it’s a matter of medical bills or something similar, property managers might overlook a poor credit score.

If your state allows it, offer a larger security deposit

Some states allow you to put down a higher apartment deposit if you, as the renter, offer it. Consider floating this idea with potential landlords to see if they are open to it. If they are, they may be able to rent to you despite your credit history.

Dispute negative marks on your credit history before shopping for a rental

Contrary to popular belief, negative marks don’t always have to stay on your credit report, and bad credit isn’t always your fault. Before you start shopping for apartments, get a copy of your credit report and search for discrepancies in your credit history.

You have the right to dispute these errors, especially if they are caused by fraud or identity theft. Write letters to the credit bureaus explaining what is incorrect on your credit history, complete with any proof that you may have regarding those discrepancies.

If the bureaus find that your disputes are valid, they will remove those bad marks from your credit report.

A tip on timing — Start doing this at least three months before your apartment hunt. It takes time to remove all those marks from your credit history. Even after you have a negative mark removed, you should monitor your report to ensure it doesn’t return or get replaced by some similarly bad, equally erroneous entry.

Get roommates

Having multiple people contributing toward the rent bill can help make a rental property more affordable for you. At times, this can also convince landlords that you’re not as bad a financial risk as you would be solo.

Seek out less costly rentals

Did you know that you have to show recent pay stubs to get an apartment or house in most cases? Yep, it’s true. And every property manager knows that the biggest risk for late payments is renting a place to someone who can barely afford it.

To make things easier on everyone, make sure that you seek out apartments or houses that are priced below your budget — ideally, a lot below. If your income clearly qualifies for a more expensive unit or a larger house, your potential landlord will worry much less about your weak credit history.

Seek property owners known for leniency and flexibility renters

If you can get insight into how potential landlords use the income from their rental properties, this may help you predict how they’ll respond to a credit history that makes you look risky.

Single-property landlords

Some landlords are still paying off that house you want to rent. If a reliable renter is the only way they can keep paying the mortgage, these property owners may not want to rent to anyone risky. Then again, if they have to get a tenant into the property as soon as possible to get the rent money flowing, they might be willing to take a chance if you make a persuasive pitch.

Multiple-property landlords

Many landlords use the rent to finance multiple rental properties. Since these property owners have more renters, taking a risk on a single renter with imperfect credit can pose less of a threat. Unlike landlords who are still paying off their first property, these multiple-property landlords may be more flexible on a case-by-case basis.

Public reputation

Regardless of the number of properties they own, landlords will vary in their willingness to work with tenants with bad credit. When hunting for an apartment, seek out rental companies and individual landlords who are known for being amenable to people in somewhat rough situations. Hints about this can be found in the consumer reviews on various sites, for instance, as well as through word of mouth. You’re more likely to be approved by property owners who’ve already shown that they will approve renters with bad credit under the right circumstances.

How to rapidly raise your credit score

  1. Dispute your credit report’s errors. Even if your missed payments are off by a couple of days, it’s worth a dispute. Any error, no matter how small, is still inaccurate and, therefore, should be disputed. This could result in the item being removed entirely if the company that provided the information fails to respond to the dispute.
  2. Request rent reporting. This can add more positive marks to your credit report if you have a good rental history in terms of payments.
  3. Pay down your debt. If you have a stable income that can go toward paying down credit card debt, do it. 35% of your score is credit utilization, so if you don’t use much, it can turn bad credit into good credit. Unpaid debt, particularly when it comes to high credit card balances, can be the sole cause of your bad credit.
  4. Ask to be an approved user on a different person’s credit card. The user in question has to have a higher credit score than you. This gives you a longer and more varied payment history.

FAQ

Do all landlords require a credit check?

A few landlords or property owners will not require a credit check. For instance, if you rent from friends or relatives, they probably won’t request a credit report. They just want you to pay on time.

Renting almost any professionally managed property will require a credit check, however. It’s a standard part of a rental application, and most landlords will not accept your application if you refuse a credit check.

What is the lowest credit score to rent a house?

There is no official minimum score for a renter to be approved for a new home, but most property managers want to see a bare minimum of 620. This is true for both renting an apartment in an apartment complex and renting a house.

How can I rent with bad credit and no guarantor?

If you cannot get a guarantor (or cosigner) and cannot dispute items on your credit report, the best thing you can do is get a roommate. In some areas, you also may be able to talk to the local housing authority about apartment complexes that offer housing for renters with bad credit.

How do you make your credit score go up fast?

There are several ways that you can boost your credit score rapidly. Here are four good tips to get you started:

Key takeaways

  • It’s best to ask property owners what their policies are when the screening process shows a bad credit score.
  • Fix your credit score before you start apartment shopping, if at all possible.
  • You can balance out bad credit scores by flaunting a spotless rental history, showing recent pay stubs that are higher than expected, getting a guarantor (or cosigner), or getting roommates.
  • Not all owners of apartment complexes and rental houses allow people with bad credit to rent from them.
  • If you are going to stick to just one person on the lease agreement, the best thing you can do is tell your real estate agents or future landlords about your financial situation.
  • Almost all property owners and property managers check credit before they rent to people, so this is something you have to assume you’ll deal with.

Continue your learning

Are you struggling with your rental credit check? SuperMoney articles document the best ways to overcome the problem of bad credit, from personal loans for people with bad credit to specialized security deposit loans for your first apartment rental.

Our site can help you learn as much as you need to know about what your landlord may find during a credit check and how you can overcome the resulting challenges. So, what should you read next? We recommend taking a look at What Is a Credit Reference On a Rental Application?.

View Article Sources
  1. Can Previously Deleted Items Reappear on My Credit Reports? — Experian
  2. Credit Reports and Scores — USA.gov
  3. Find rental assistance programs in your area — Consumer Financial Protection Bureau
  4. Renting a Home with Fair to Bad Credit Scores — Equifax
  5. Useful background article from personal finance, renters’ information, and credit monitoring service sites — Various
  6. Using Consumer Reports: What Landlords Need to Know — Federal Trade Commission
  7. Best Personal Loans for Bad Credit — SuperMoney
  8. Best Renters Insurance — SuperMoney
  9. How To Finance Multiple Rental Properties — SuperMoney
  10. Rental Credit Checks: Everything You Need To Know — SuperMoney
  11. Security Deposit Loans: Do They Make Renting Easier? — SuperMoney
  12. The Ultimate Guide to Credit Reports — SuperMoney
  13. What Is a Credit Reference On a Rental Application? — SuperMoney