Can You Be Denied a Rental Home Because of Bad Credit?

denied an apartment

The most well-known consequence of having bad credit is trouble getting loans or credit cards, but a low credit score can also make it difficult to find a place to live. Landlords, especially large property-management companies, will likely check your credit report before approving your lease, and there are plenty of negative items that landlords see as deal breakers with potential tenants.

But don’t fret—you may still have options.

Is Bad Credit an Automatic Rejection?

By most landlords’ standards, the minimum credit score to rent an apartment is 620. But many landlords look past the credit score and search for specific activity on a potential tenant’s credit report.

Ben Papale, a real estate broker in Chicago, Illinois, says judgments, tax liens, and collections accounts on utilities are almost always nonstarters, but medical collections and late credit card payments aren’t as problematic in the eyes of a landlord.

Barry Maher, a property manager in Corona, California, says the 2007 recession changed his mind on bad credit. Before, he never looked at applicants with bad credit because plenty of other applicants had good credit. Then suddenly almost all the applicants had a credit problem.

“I started looking at it more closely,” Maher says. “Particularly after the recession hit, I had people who had declared bankruptcy, people who had lost their houses. But I was still able to find some incredibly good people to rent to.”

It can be difficult to get into an apartment with bad credit, but there are a handful of things you can do to improve your approval chances. Use the seven tips below to help you get into that apartment or house you’ve been eyeing.

1. Find an Apartment with No Credit Check or an Independent Owner

Large management companies are less likely to consider applicants with bad credit, so you’ll want to look for a landlord who has a small operation—who maybe owns just a few units or properties.

“They’re a lot more open to considering special considerations,” Papale says. Large management companies are unlikely to make exceptions because that opens them up to the possibility of getting sued if someone in a similar situation applies for an apartment and is denied, Papale says.

If you’re dealing with an individual, rather than a company, you may have an opportunity to tell your story and explain why you’d be a good tenant.

2. Explain in Person

Maher puts a lot of stock in personal interactions. He says he always makes reference calls himself—the one time he didn’t led to a terrible tenant, and he won’t make that mistake again. Now he knows there’s a lot of value in meeting potential renters before deciding.

“If they’re forthcoming and they meet with the person making the final decision to explain their case, they’re way ahead of the game,” Maher says.

Papale recommends renters with bad credit write personal statements to send in with their applications—to put the credit problems in context and make an argument for themselves.

3. Be Open about Your Income and Savings

When explaining your personal situation, proof of a stable income can go a long way. Come prepared with pay stubs, and show you make enough to comfortably pay rent—rent should be less than 30% of your monthly income. Knowing you’re not strapped for cash will be a comfort to your potential landlord.

If you don’t have a steady income but you do have a sizeable bank account, bring bank statements that show you have enough savings to pay at least six months’ worth of rent. A financial cushion is better than nothing, and it may bring an independent owner over to your side.

4. Make Advanced or Larger Payments

Money talks. Just like how showing your income can help your chances of getting into an apartment, making a large advanced payment can be a helpful gesture of good will. Paying a larger deposit than requested or even three months of rent in advance will elevate your renting potential in a landlord’s eyes.

5. Find a Roommate

If you don’t have your heart set on having an apartment to yourself, a roommate can be a good solution while you improve your credit. Find someone who is already secure in their lease you can move in with without needing a credit check. Or find a landlord who will let you move into a new place with only your roommate’s name on the lease.

You can save money by splitting rent with a roommate, and your landlord will feel more comfortable having at least one person with good credit living in the apartment. Just don’t hang your roommate out to dry when rent is due.

6. Consider a Guarantor or Cosigner as a Last Resort

Having a friend or family member cosign on your rental application will make getting into an apartment a lot easier, but it can strain your relationship. If you choose this route, you’ll have to find a cosigner who has a secure income and good credit that they’re willing to put on the line for you.

You also need to be certain you will be able to pay rent every month. Missing a payment means your cosigner will be forced to pay it on your behalf, which can lead to a lack of trust. Nobody wants that, so again: make sure you can pay the rent!

7. Repair Credit for Future Apartment Hunting

Once you’ve gone through all the work to get into an apartment with less-than-ideal credit, take steps to avoid this situation in the future. You can repair your credit in about one to two years if you put your mind to it.

It’s important to check your credit scores before applying for a rental. By doing so, you can not only proactively address any credit issues you have but also make sure you’re accurately representing yourself. Credit scores fluctuate constantly, so keep an eye on your score. You wouldn’t want to fill out an application thinking everything’s fine only to have a landlord think you lied because he found issues with your credit report. Get your credit score for free on Credit.com, with updates every 30 days.

Image: iStock

The post Can You Be Denied a Rental Home Because of Bad Credit? appeared first on Credit.com.

The One Thing Job Seekers Forget Employers Look At

Brush up your resume. Update your references. Clean up social media accounts and ...

There are some steps even first-time job seekers know to take ahead of formally seeking out new employment opportunities: Brush up your resume. Update your references. Flesh out your LinkedIn profile. Clean up your other social media accounts. Network.

It’s all fairly straightforward, but there’s something else very important new graduates and beyond will want to add to do their pre-employment search to-do list: Check your credit reports.

Why Should I Check My Credit Before a Job Search?

Some employers will pull a version of your credit report as part of their application process. And patterns of money mismanagement — like a bunch of missed payments or multiple collection accounts — could wind up hurting your odds of scoring a position, particularly if that gig involves handling cash, access to sensitive financial information, company accounting or government work. That’s why it’s a good idea to review your credit reports ahead of your job search.

You can pull a copy of your credit reports from each major credit bureau — Equifax, Experian and TransUnion — for free every 12 months via AnnualCreditReport.com. You can also view your free credit report summary, along with two free credit scores, updated every month, on Credit.com.

Financial Fact: Some states, including California, Hawaii and Washington, have banned employers from screening an applicant’s credit in certain circumstances. And, in all states, employers can only look at your credit report, not your actual credit score. Plus, they can’t pull your credit reports without your permission, so if a credit check is part of their application process, you’ll at least have a heads up. (There will be a form you’ll be asked to sign.)

What Am I Checking For?

First, you’ll want to make sure there aren’t any errors on your file that could needlessly cost you a prime position. These errors are more common than you think: a Federal Trade Commission study from 2012 found that one in five Americans had an error on their credit reports. If you find one, be sure to dispute it with the creditor and the credit bureau in question. You can learn more about disputing errors on your credit reports here. Keep in mind, credit bureaus have 30 to 45 days to investigate a credit report dispute, so won’t necessarily see that error disappear right away. Hence the reason you’ll want to do check your reports before your job hunt kicks into full gear.

Second, if you discover legitimate blemishes, you’ll want to determine if anything can be done to fix them. For instance, you might want to shore up unpaid collection accounts or pay off high credit card balances. Keep in mind, many missteps will stick around for awhile as most negative information stays on your credit file for up to 7 years. (Certain bankruptcies can even take up to 13 years to age off your reports.) Still, even if you can’t undo a troublesome line item, you’ll at least know that one is there — and will be able to address any issues upfront with prospective employers.

Finally, work on improving your credit overall so you won’t have to worry so much about a dreaded credit pull the next time you’re looking for new employment opportunities. You can rebuild bad credit by using a starter credit card to establish a new and improved payment history, keeping credit card balances below at least 30% and ideally 10% of your total available credit limit(s) and adding a mix of credit accounts organically as your score and/or finances rebound.

Not sure how to fully prepare for a job hunt? No worries. Recent or soon-to-be college graduates in need of some help can find a full 50 things to do to score their first job right here

Image: Mikolette

The post The One Thing Job Seekers Forget Employers Look At appeared first on Credit.com.

Here’s What to Do the Next Time a Business Asks for Your Credit Card by Phone or Email

When we provide our credit card information via remote means, we are often made more vulnerable to identity theft. Here's why.

Recently, I was booking a hotel reservation for a family member and in the process was asked to provide certain information. It was a simple third-party credit card authorization. What could possibly go wrong?

Plenty.

Beyond the fact that I am professionally paranoid — I wrote a book about it — there are so many ways for your information to wind up in the wrong hands, especially your credit card information. When we provide our credit card information via remote means, we are often made more vulnerable to identity theft by the authentication process itself.

There is no best way to conduct this sort of business remotely without putting ourselves in danger of becoming victims of identity theft, but there are better and worse ones. These days, it’s more expedient to focus on the very few ways sensitive information can be made available to third parties without creating unnecessary exposure.

A Better Way for Another Day?

If you are unfazed about sending your information via electronic means, consider something similar: paying for a meal with a credit card. We expose our data and send it on a journey every time we pay a bill at a restaurant.

I saw my first portable credit card reader on American soil the other day when paying the bill at a new restaurant. First, I want to say that the lunch was excellent, and I would have gone back even if the waiter hadn’t trotted out that marvelous handheld identity theft reduction device. I am scam-obsessed, and have long envied our friends on the other side of the Atlantic — and locations in other directions as well — for the ubiquity of at-table card payment.

The reason those machines are great is simple: The server has no opportunity to write down or photograph your card information.

Let that sink in … It’s unsettling now that you think about it, right? All those times a server has walked away with your credit card, what stopped him or her from snapping a quick pic of the front and back before returning to your table?

That reader is new technology. The service industry is finally (belatedly) getting hip to the challenge of protecting consumers from identity theft and other scams, but what should you do while it’s still in catch-up mode?

How to Send Your Stuff

The form that was emailed to me by the hotel made the threat of a sneaky waiter snapping pics of my credit card seem like amateur hour.

Obviously, the reservations department asked for my credit card number and expiration date. They also wanted my billing address, work and home phone numbers, email address and signature. Then there was the outline of a box, under which were the words: “Copy front of the credit card” and “Copy of ID.”

Now, I’ve already confessed to being someone who looks for the angle crooks will try to use. The idea of sending, in addition to all the other information requested, an image of a valid form of identification — in my case, my driver’s license — was truly unthinkable. I’d sooner have my Social Security number puffed out by a skywriter over the House that Ruth Built during a Yankees-Red Sox playoff game. (Not convinced? Read up on the surprising ways identity theft can hurt you.)

The form gave me the option of sending my cornucopia of sensitive personal information via email or by way of fax. Which is the better choice?

Hackers Are Really Good at What They Do

Phone calls and faxes conducted over phone lines can be rerouted, emails can be intercepted. Phone calls can also be listened to, and therein lies another problem. When you call a service provider — any kind that costs a set amount every month— there will come a time during the call when you will have to provide your Social Security number so that the company can run a credit check. A service rep is going to ask you for it — the whole thing.

Remember the waiter? Same problem.

Absolutely nothing can stop that person from writing down your information. And before you ask why you can’t input the information on your keypad, remember: Phone calls are not secure, the tones can be intercepted. Encryption is both complex and costly. This is why the federal government has been investigating the possibility of a universal identifier. But in the meantime, those credit checks or authentications pose the same, if not greater, peril as your credit card’s journey at most restaurants.

Old Is New (But Not Fail-Safe)

As counterintuitive as it seems, using the fax in this scenario is the safer path, though it is not completely safe given the possibility of data interception.

Pro tip: Call before sending a fax that contains personally identifiable information or anything else that is for as few eyes as necessary, and ask the person on the phone if they are near the fax machine, or if not if they can be. Call again to make sure the transmission has been retrieved and isn’t just sitting in a tray waiting for a scam artist to come sauntering by with a smartphone and a shopping list of things they want to purchase using your information.

While we await better solutions, you are the ultimate guardian of your personal information, and your vigilance given the myriad threats out there will lead the way for change. In the meantime, get in the habit of monitoring your finances for any sign of mischief. You can view two of your free credit scores, with helpful updates every 14 days, for free on Credit.com.

Image: nyul

The post Here’s What to Do the Next Time a Business Asks for Your Credit Card by Phone or Email appeared first on Credit.com.

10 Events Homeowners Insurance Doesn’t Always Cover

what-homeowners-insurance-doesn't-cover

If you own a home, you most likely have homeowners insurance (it’s typically required to secure a mortgage). You know your insurance policy covers your home and the possessions inside it in the event of a fire or theft, but you may not realize there are many things which are not covered by your homeowners insurance.

Before you have a claim, it is important to know what your insurance provider will and will not cover so you can alter your policy or budget accordingly.

1. Flooding

Flooding is usually not covered under a standard homeowners insurance policy. If you live in an area prone to flooding, you may have already secured flood insurance. However, many people who do not live in this type of area do not have this additional coverage. You can visit the National Flood Insurance program to learn more about adding this to your insurance line up.

2. Earthquakes

If you haven’t experienced an earthquake in your area, you probably feel you do not need to worry about earthquake coverage. However, there have been more instances of this in less typical parts of the country, like the one that hit Oklahoma recently.

If you have a basic policy, it likely will not cover this type of damage. Therefore, you would need to take out additional insurance to cover your home. This is usually only an issue in areas which face higher risk, but you can ask your agent about this and decide if you should purchase it or not.

3. Animal Bites

Many times, basic homeowners insurance does not cover any sort of animal bite. If you have pets, you need to check your current policy to see if you are covered or not. If you are not, find out what you can do to cover yourself.

4. Sewer Backups

If your sewer backs up into your home, a standard insurance policy may not cover you. If you live in a newer home, this may not be as much of a concern. However, if your house is older, or you have a septic tank, this could be more of an issue. Ask your agent about adding in additional coverage.

5. Sinkholes

With more and more stories of these instances hitting the news, it is something you need to consider. If you reside in Missouri, Texas, Florida, Alabama, Kentucky or Tennessee, you are more likely to have this potential issue arise. There are riders you can add to your policy to protect your home, should this happen to you.

6. Termites

In the majority of cases, the damage caused by these little bugs is not covered and the only way you can cover these costs is by paying out of your own pocket.

7. Simultaneous Events

If you happen to suffer severe wind damage and then your home floods, you may not be covered. The reason? Flood is not covered under your policy. It is what the insurance world calls “anti-concurrent causation.” This is when two events happen at the same time — one of which is not covered under your policy.

8. Burst Pipes

While many times a burst pipe is covered, there are times when it may not be. For example, if it is due to homeowner negligence, such as not leaving the heat on when away on a winter vacation or forgetting to drain a pipe, then it may not be covered. Make sure you take the necessary steps when you are going to be away to help prevent damage. And consider talking with your insurance provider to see what your policy coverage entails.

9. Mold

Mold is horrible and, not only is it ugly, it can actually make you sick. You might check with your provider to see if mold damage is covered by your current policy. If you ever have water in your home for any reason, it’s a good idea to get it cleaned up as soon as possible to help prevent mold growth.

10. Identity Theft

This is actually slowly changing with many companies, but some do not cover the problems that arise because of identity theft. Some companies offer optional additions for your policy, which can cover things like the cost to get your credit restored. (You can see where your credit currently stands by viewing two of your credit scores for free, updated each month, on Credit.com.)

No matter which company you use for your insurance, make sure you talk about these instances and add in those riders or consider purchasing additional insurance as needed. Make sure you take the time to read your own policy, or go over it with your provider, to help you avoid any surprises.

Image: Marilyn Nieves

The post 10 Events Homeowners Insurance Doesn’t Always Cover appeared first on Credit.com.