Renting a Home with Fair to Bad Credit Scores
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Landlords are looking for someone who will pay their rent on time. If your potential landlord checks your credit history, they’re looking to see that you have a positive track record of paying your bills and that there are no judgments from a past landlord, indicating that you broke a lease or were evicted for nonpayment.
If you have a fair to bad credit history and are unsure how to increase your credit scores, there is still hope for you to rent a home or apartment.
Check your credit reports.
First, you should preempt any credit issues by pulling your credit reports from the three nationwide credit bureaus and checking for errors. You can get one free copy of your credit report annually from each of the three bureaus by visiting annualcreditreport.com. In response to the Coronavirus/Covid-19 pandemic this program has been temporarily expanded, allowing you to get one copy of your report weekly through April 2021. If you find errors on any of your reports, immediately contact the relevant bureau. If there are no errors, examine the reports to understand why your scores are low, including missed payments during a previous time of hardship or an unpaid debt in collections.
Explain your situation to the landlord.
If there’s a good reason your credit history was poor for a period of time, explain to the landlord why your credit scores took a hit.
Use your history to your benefit.
Keep detailed records of your good payment history with other landlords, including copies of canceled checks and receipts. Be prepared to show these documents to the new landlord.
Pay more up front.
You could also offer to pay a larger security deposit or pay a few months’ rent in advance. Making a larger financial commitment on the front end might make the landlord perceive you as less of a risk. If you stop paying rent down the road, at least the landlord would have a significant amount of your money already in hand.
Similarly, setting up direct rent payments through your bank may make your potential landlord feel more secure about renting to you. Alternatively, you could agree to pay a slightly higher amount of rent each month, if you can afford it.
Consider a roommate.
If you find a roommate whose credit history is better than yours, they could sign the lease solo. Moving in with someone who already has an apartment rented is an option, as well. Plus, having a roommate allows you to split the bills, which should reduce your monthly expenses, increase your financial stability and give you opportunities to improve your credit scores.
Get a cosigner.
If all else fails, you can ask a family member or friend who has a good credit history to cosign the lease with you. If you fail to pay your rent, the cosigner is responsible for the debt, which puts your landlord in a much less risky position.
Trying to find a home or apartment with fair or bad credit scores can feel extremely overwhelming, but it’s not insurmountable if you understand your options and communicate openly with your potential landlord.