How to Find a Place to Live With Bad Credit

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Don't let bad credit keep you from finding a new home.

It's challenging enough to find a place to live that's in your budget and where you can see yourself staying long-term. But when you have bad credit, that home search becomes even more difficult.

Some landlords won't even consider your application if your credit isn't good enough. Even if they do consider it, if anyone with better credit applies for the same place as you, the landlord is almost certain to pick them.

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This is a frustrating situation, but it's not hopeless. Here are the best strategies you can use to find a place to live when you have bad credit.

Rent from an individual landlord

Certain rentals will have much stricter tenant requirements than others. For example, if a property management company is in charge of a rental, you can safely assume that bad credit will be a deal breaker. These companies usually don't deviate from their minimum income and credit score requirements for prospective tenants.

You could have more luck with an individual landlord. This is when the owner of the rental also handles the management duties, including tenant applications. Individual landlords may be more willing to work with you despite your bad credit. 

Save and pay more upfront

In some cases, you can convince a landlord to take a chance on you by paying multiple months of rent upfront. This does depend on both the landlord and part of the country, because some states have regulations regarding whether tenants can pay rent in advance.

Even if paying more rent upfront isn't an option, a large savings balance can still help with getting a place. Landlords typically charge applicants with bad credit a higher security deposit, so having the savings to pay this will help if you are approved. And being able to verify the balances in your bank accounts could alleviate a landlord's worries about your financial situation.

Rent a room or sublet

One way to potentially avoid a credit check is by renting from a tenant who already has an existing lease. Room rentals and sublets are both good options that you can search for on rental listing sites. Since the tenant is trying to find a renter in these situations, they'll do the screening, and they likely won't conduct a credit check.

There are precautions you should take if you go this route:

  • Get a rental agreement so that you have proof you pay rent and live there.
  • Verify that the landlord or property management company is okay with you living there. If the tenant plans to sneak you in, you're better off finding another place.

It's also important that you carefully evaluate any potential roommate, because trust me, the wrong roommate can make your life miserable. I've had great roommates in the past. I also had one who got upset with me when he couldn't find his Star Wars figurine.

Provide proof of your income

A landlord's biggest concern is that you'll pay the rent on time. Bad credit is one strike against you, but they may still be willing to rent to you if you make enough money and you can provide proof of income.

How much money is enough? A standard rule many landlords use is that gross monthly income should be at least three times as much as the rent. If you make more, that's even better.

Get a reference letter from a previous landlord

There are all kinds of reasons your credit score can drop, and many of them don't relate to whether you'd be a trustworthy, reliable renter. By showing a prospective landlord that you've been a model tenant in the past, you could convince them to approve your application.

If you previously rented a home and you left on good terms, ask the landlord for a reference letter.

Find a cosigner

Know anyone with good credit who's willing to cosign on the rental application? This could help you get approved, because the landlord will run a credit check on your cosigner and base their decision on that cosigner's credit score.

Not every landlord accepts cosigners, so you'll need to find one who will. It can also be difficult to find a cosigner since they will be responsible if you damage the apartment, don't pay rent, or get evicted. But this method can qualify you for a home you wouldn't be able to get on your own.

A temporary solution

All of the strategies listed above are temporary fixes to help with your most pressing need -- finding a new place to live. After you've handled that, your next step should be to build your credit so that you don't end up in this situation again.

To do this, make sure that you pay your bills by the due date and don't let the balances on your credit cards get too high. By following good credit habits and keeping an eye on your score, it will eventually be high enough that you can easily qualify for any home.

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