San Francisco Chronicle - (Sunday)
How to rent an apartment with a low credit score
Credit scores are one of the checks property managers usually perform to assess whether an applicant is a reasonable risk.
Finding a rental with low credit is more challenging but don’t give up.
Strategies like chatting with the property manager, subletting, and submitting references can help secure a rental with low or bad credit.
Finding an apartment for rent with a low credit score can be challenging, but it’s not impossible. In addition to looking for no-credit-check apartments, you can take steps to increase your chances of having your rental application accepted when applying for apartments to rent with low or bad credit. What should you know about your credit score for an apartment application?
Why do landlords and property managers perform credit checks?
Property managers perform credit checks on potential renters to ensure the renters can meet the financial commitment of renting the apartment. Credit checks teach property managers about a renter’s financial history. If applicants have fulfilled their financial obligations and maintained a good credit score, they will likely pay their rent in full and on time. Negative marks on your credit or a low credit score could impact the property manager’s decision to accept your rental application.
What is a credit score?
A credit score is a threedigit number that reflects your history with credit and loans. These scores usually range from 300 to 850. A low credit score shows you have a poor history with credit and loans, while a high credit score shows you have been financially responsible.
What credit score do I need to rent an apartment?
Ideally, property managers want renters with credit scores of at least 600. However, some property managers will be more flexible and accept renters with much lower credit scores. Luxury apartments and apartments in popular cities often ask for applicants with higher credit scores. You can ask your potential property manager whether there is a minimum credit score the property management firm will accept.
Tips for applying for an apartment with a low credit score
No-credit-check apartments are not your only option if you have a low credit score. Discover some tips for applying for a rental when you have a low credit score for an apartment:
1. Be transparent about your credit score
Transparency is essential if you’re trying to find apartments for rent with bad credit. Applying for rentals can be stressful. You don’t want to blend in with the pack or stand out because of your low credit score. You can submit a rental resume and cover letter as part of your application. A rental resume and cover letter explain who you are, your rental history, income, and why you’re looking for a new apartment. These documents are excellent places to detail anything about your credit score that may be questionable from a property manager’s point of view.
It’s also a good idea to have an honest conversation with a prospective property manager when interviewing or touring an apartment. Give the property manager context about your current credit situation and help the individual understand you more personally. Are you in debt because of student loans? Were you laid off unexpectedly and forced to use credit for purchases? Explain what led to your low credit score and assure the property manager that you’re working toward improving your credit score.
2. Show proof of financial responsibility
The best way to show a potential property manager you can make rent is to provide proof. Be prepared to submit pay stubs, bank statements, or tax documents to prove your income. Most rentals ask renters to have a monthly gross salary that’s at
least three times more than the cost of the rent. You could also show proof of on-time complete rental payments and your savings. Do not share any tax documents or personal bank information unless the listing is verified to avoid compromising your personal information.
3. Consider a co-signer
A property manager may be more likely to choose you if you have a co-signer. If you have a friend, parent, or relative with good credit who will be a guarantor and co-sign your lease, share this information with the property manager. Many young renters who don’t have a rental history use co-signers, so they should already be familiar with the process. Having a co-signer means that person is ultimately held responsible for any missed payments, damage, or unexpected events related to your apartment. A co-signer reassures the property manager that the property management company won’t be out of pocket for rent.
4. Become a co-tenant
If bad credit prevents you from getting an apartment on your own, consider renting as a co-tenant.
If you have a friend or acquaintance who is currently renting and looking for a roommate, this person may be able to add you to the lease as a co-tenant. In this case, the individual you choose can be the master tenant, and you can be the subletter. You may still need to provide your credit score, but the property manager might not place as much importance on yours since your roommate is the legal leaseholder.
5. Offer more money upfront
You can also offer to pay a larger security deposit, the second month’s rent, and the rent you need to pay when you sign the lease. Offering more money upfront shows the property manager you’re serious about this apartment and, despite your low credit score, you can afford the monthly payments.
Discuss any extra funds you are willing to pay with the property manager upfront to combat possible denial when applying for apartments for rent with bad credit.
6. Include positive references in your application
Reference letters can go a long way if you have a rental history. Positive testimonials from past property managers will help prospective property managers understand that you can pay rent on time, be a good tenant, and keep the apartment in good condition. If you don’t have a rental history when choosing your rental reference, select someone who can speak positively about you, such as an employer.
7. Establish credit
Believe it or not, not having a credit score at all (no credit cards, car payments, etc.) can also negatively affect your chances of renting an apartment. Landlords like seeing a history of credit to better understand how you handle making consistent payments. Having one credit card you pay off at the end Believe it or not, not having a credit score can also negatively affect your chances of renting an apartment. Property managers like seeing a credit history to understand better how you handle making consistent payments. Having one credit card you pay off at the end of every month can help you build your credit score. This activity shows the property manager that you can handle financial responsibility and make payments on time and in full. Getting accepted for an apartment with no credit can be just as tricky as getting apartments with bad credit. Tips for improving your credit score
These strategies can help you improve your credit score to make securing rentals easier:
Pay off any outstanding debt when possible. Make the minimum payments on your credit cards every month and on time.
Turn on automatic payments so that you don’t need to remember to make payments on time.
Limit spending as much as possible.
Increase your credit limit.
Ask your property manager and utility company to report your payments to major credit bureaus.
Consolidate any debt into a lower interest financing option through a credit union.
Do not open any new cards without reducing the balance on your current credit cards.
Clear up any inaccuracies on your credit report.
While no-credit-check apartments are an option, you can take steps to show any potential property manager that you have the financial responsibility to be a valuable renter.
FAQs: Renting with a low credit score What determines my credit score?
Five factors determine your credit score:
1. Whether you made scheduled loan or credit card repayments in full and on time
2. How much you currently owe on credit cards and loans
3. The average age of your loans
4. Whether you’ve recently applied for new credit or loans
5. Whether you have a mix of revolving and installment credit
How can I find out my credit score?
You can find your credit score by asking for a credit report from Equifax, TransUnion, or Experian. Request a free credit report every 12 months. Your credit report can tell you whether your score is low enough to concern property managers and alert you to any mistakes you can dispute to increase your score.
What are no-credit-check apartments?
No-credit-check apartments are rentals that approve applicants without credit checks. These types of rentals are usually for basic apartment buildings. Private property managers who want to fill their apartments immediately typically list them.
No-credit-check apartments can be riskier to lease and sometimes might have a history of common rental scams.
If you’re looking at no-credit-check apartments, verify the listing through an in-person tour, virtual tour, or verified photos.
These are just a few ways you can avoid renting a no credit check apartment, even with a low credit score. Once you’re ready to start looking for a new apartment, keep these tips in mind and you’ll be on your way to having a new home.