Bad credit can trigger all sorts of issues, from difficulty securing a car loan to trouble getting a mortgage. But even if you're just looking for an apartment to rent, your credit history can pose problems.
Most landlords use a credit check to vet potential renters. They'll peer at your credit history to assess how much of a financial risk you might pose. If your credit history is bad, you might have a tough time qualifying for that rental you love so much.
What should you do if your credit history is less-than-stellar? Here are seven ways you can overcome your bad credit and still get that rental you're looking for:
1. Find a Guarantor or Co-Signer
Ask a trusted friend or relative with good credit to cosign the rental application with you. While you'll be the only one actually living in the apartment, your cosigner agrees to cover the payments in the event that you default on your rent. This can provide a landlord with the extra reassurance he needs.
Of course, you don't actually want them to be forced to take over payments for you, so make sure the monthly rent is an amount you can comfortably afford.
2. Be Honest and Show Progress
Sometimes, bad credit isn't a reflection of bad money management. You may have lost your job, suffered from medical problems or experienced another financial setback that was out of your control. If this is the case, be upfront about it—before the landlord even runs your credit check. Your willingness to admit and own up to your bad credit is a point in your favor.
It also helps to be able to demonstrate the steps you've taken, and are currently taking, to fix the problem. This will show the landlord you're responsible and committed, even if your credit isn't perfect.
3. Pay in Advance or Increase Your Security Deposit
Bad credit makes landlords nervous because it indicates you might default on the rent. By paying a month or more in advance or offering a two-month security deposit, you can alleviate their concerns. Not only does this show your commitment, it also provides them with extra cash that can cover some of the losses and damages, should you skip out on the rent. (Which, of course, you won't.)
4. Get a Roommate
Willing to share your living room and kitchen? Find a roommate. If the landlord will allow just one person to sign the lease, see if your roommate is willing to sign it solo. (Alternately, try to move-in with a roommate who's mid-lease.) This way, the person on the lease is the one with more solid credit.
Roommates come with a second benefit: you'll be able to share the bills. By reducing your financial burden, you can continue to pay down your debt and repair your bad credit faster — a true win-win!
5. Show Solid Income and Offer to Pay via Direct Deposit
Even if your credit history is a little shaky, being able to show that you currently have regular, solid income can go a long way toward making a landlord feel better about you.
When applying for an apartment, have proof of income ready, such as recent pay stubs, tax returns and a letter from your employer verifying your employment status and income. Offering to have your rent automatically deducted from your bank account can also help.
6. Compromise by Paying a Little More
Some landlords — especially if you're renting from a property management company —charge additional "risk" fees if your credit score is poor. You may want to consider taking the hit if you really love the apartment, or if you need to find a place to live quickly.
If you're dealing with an individual manager who is inclined to deny your application, you may be able to negotiate a slightly higher rent as a gesture of good faith.
7. Bring Recommendations
You'd bring letters of recommendation for a job application. Why not bring the same when you're trying to rent?
Letters of recommendation can reassure a potential landlord that you're a responsible person who won't cause them any problems. Ask for letters from current and previous employers, current and previous landlords, and even past roommates who can vouch for your character. Even if your previous landlords were only for short-term arrangements, their endorsement can hold weight.
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