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.

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Can I Get a Car Lease With Bad Credit?

Auto Loan Balances at an All-Time High

Your heart is set on a shiny, new set of wheels but your credit is tanked. Don’t despair; you’re not the first driver to face this dilemma. Car leases do exist for those with bad credit and may even help you beef up your score.

Here’s why: Monthly payments can be much lower for leased cars, they often fall under the manufacturer’s warranty and tend to require less money down upfront. Not missing a payment on your lease may also help you amp up your credit, making you that more attractive to lenders down the road.

If all that sounds good to you, here’s how to get started.

1. Check Your Credit

Before you apply for any auto lease, you need to know where your credit stands. That way you’ll have an idea of what type of lease you may qualify for. It may also prevent you from overpaying, lest you think your credit is worse than it actually is. (You can view two of your credit scores for free, updated each month, on Credit.com to see where you stand.)

2. Shop Around

Now that you’ve got your number, it’s time to go shopping. But first, some dating advice: Don’t fling yourself at every slick dealer who feeds you a line — take your time to find the right one. Don’t be afraid to ask questions if something sounds off. Your credit may stink, but you shouldn’t settle for an unfair agreement.

Something to keep in mind: every time a lender pulls your credit report, that’ll create a hard inquiry on your file, which could ding your credit score. But the vast majority of credit scoring models are smart enough to know you’re shopping around and will group your hard inquiries from different dealers into just one inquiry if you complete your shopping in a specific timeframe, ideally two weeks.

3. Be Realistic

If your score is less than 720, you may encounter some difficulties. This could mean a higher monthly payment, a hard time getting approved or being asked for a security deposit or percentage of the car’s cost upfront. (Some dealerships require the latter, but you can always volunteer to put more money down if you want a smaller monthly payment.)

It’s also helpful to go into the process with realistic expectations. You don’t have a perfect credit score, so you don’t want to overextend yourself and get a super expensive car lease you’re unable to actually pay. Make sure you opt for something that you really can afford like a compact or mid-sized car instead of a luxury sedan, for example. The monthly payments will likely be lower, and there’s no reason to push your budget to the limit if you’re already dealing with financial issues.

4. Explore Other Options

Still coming up short? There are options. You can ask a trusted friend or family member to co-sign your lease. If you choose to go this route, you should both be aware that if you fall behind on payments and the account becomes delinquent, that will appear on your co-signer’s credit report. Only do this if you feel you can manage the lease responsibly.

Another option would be a lease takeover, which is still subject to approval from the original lender. This allows you to take over a lease contract from someone who can no longer make the required payments, and is often easier to qualify for.

More on Auto Loans:

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