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

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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 an Old, Unpaid Bill Keep Me From Getting an Apartment?

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Searching for a good place to live is tricky enough to make anyone, even a person without past financial problems, hate the process. So to find an apartment that’s affordable, has the features that meet your needs and is in a decent location, only to have the landlord hold up your application because of an old item on your credit report — well, it’s frustrating, to say the least. A Credit.com reader recently found themselves in this situation:

I have a PG&E bill from 2010 that is on my credit report, but PG&E show it as a discharge and are not asking for payment. I need to clear this up before my new landlord will allow me to move into a new place. If I secure a settlement for this can I request them to remove this from my credit report?

We put the question to John C. Heath, a credit expert and consumer attorney for Lexington Law, a Credit.com partner. Here’s what he said.

“I don’t know if I would attempt to secure a settlement. The amount has been written off,” Heath wrote in an email to Credit.com. The reader may want to check the statute of limitations in their state, because the debt may no longer be enforceable, Heath added.

This may take some explaining to your landlord. “I would speak with the landlord and see if they would be willing to overlook a [six-year-old] debt. A lot can change in a six year period,” Heath wrote.

Negative information on credit reports (like a charged-off debt) generally remains there for seven years. It’s important to remember that this goes for paid, unpaid and settled debts alike — so paying off an old debt doesn’t remove the negative history from the record. However, if you feel information on your credit report is inaccurate or unfair, you can challenge it with the credit bureaus and data furnishers reporting it to them. You can do this on your own (you can go here to learn more about disputing errors on your credit report), or you could consider hiring a reputable credit repair professional to help you. To keep tabs on your credit and any negative items affecting it, you can get two free credit scores with regular updates from Credit.com.

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10 Ways to Save Big on Renting Your Next Home

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It’s no secret that rents are high in many areas of the country due in part to millennials’ affinity for renting combined with the impact of Great Recession foreclosures that sent some homeowners looking for leases. Boomers, for a variety of reasons, have also become more likely to rent.

The bottom line is that high demand for rentals has driven up the costs. Even so, it doesn’t mean that you can’t get a good deal, or at least avoid paying more than you should.

Consider these tips for tracking down an affordable rental:

1. Avoid the giant, corporate complexes

Instead, look for apartments where you will deal directly with the owner or a manager. Those landlords generally place more value on long-term, reliable renters than those who work at corporate complexes, reports The Fiscal Times. They are also less likely to raise rent quickly.

2. Know the neighborhood

Even in a seller’s market, landlords are anxious to rent their properties to qualified tenants as quickly as possible. Use that to your advantage by scouring the neighborhood and targeting the properties for rent. Consider looking for housing that’s a bit older, and you may have a solid shot at negotiating rent, reported DailyFinance.com.

3. Show them your ‘perfect tenant’ persona

It’s easy to forget that in many ways landlords are entrusting their valuable property to your care. That’s why they look for those with good credit scores, stable employment and solid past rental histories. Sure, it’s tempting to wear sweats and sneakers when apartment hunting, but remember — leasing is a business transaction. You needn’t dress as if you stepped out of a corporate boardroom, but having a clean, professional appearance is a good idea. Landlords also want you to look good on paper — meaning a good credit score, a stable job history and stable rental history. If one of these things is going to set off alarms, be prepared to address it. For instance, a landlord I know was willing to rent to a couple even though the husband had a marginal credit score, because they were recently married and the wife was now in charge of finances for herself and her (admittedly) disorganized spouse. They were prepared for questions and got the rental.

4. Prepare to negotiate for savings

Renters are often surprised at how easily they can reap significant savings by negotiating. Be prepared to ask for one month free, or for a lower monthly rate in exchange for a longer lease. Ask for a two-bedroom apartment for a one-bedroom price. Ask for free fitness membership or a break on utilities or parking. You might even ask if there’s some service you could perform – lawn mowing, snow shoveling or even general maintenance on your own unit – for a reduction in rent. The time to speak up is, of course, before you sign or renew a lease.

5. Weigh everything that is covered by your rent

Is it vital that you live in an apartment with the “right” address? Consider that at a slightly less prestigious location your rent might also cover the costs of parking, a doorman, on-site fitness facilities, utilities and more.

6. Shop at off-peak times

Landlords are especially anxious to rent between October and February. You’ll find more specials and choices when you shop for a rental at a nonpeak time, reports The Washington Post.

7. Read the lease first, then sign

Sure, that sounds like a no-brainer, but in the frenetic, time-consuming rush to rent an apartment many of us sign first and ask questions later. Check the lease, and read all fine print. Do you pay extra for utilities? Is water included? Are there parking restrictions? Can you sublet? And even if everything looks OK but you have misgivings, don’t sign, recommends The Fiscal Times.

8. Ask about referral bonuses

It’s sometimes difficult to find qualified renters for properties, which is why apartment managers often value referrals. Ask if the apartment complex has a referral program or if they would consider paying a “finder’s fee” if you refer a prospective tenant who becomes an actual resident. I’ve heard of referrals ranging from $50 to $250, depending on time of year, location and other variables.

9. Don’t forget about pro-rated rents

If you rent an apartment but don’t plan to move in on the first of the month, find out if the landlord will pro-rate your rent – just allow you to pay for the weeks you are there. Although some property managers of highly desirable units might insist on the full first month’s rent, many will likely be more than willing to discount.

10. Consider your gut reaction to the property

Rental notices can be misleading, and rental layouts can make a big difference. A 750-square-foot apartment that includes a long hallway might feel smaller than a 600-square-foot apartment with a more open layout. A cheaper apartment in a neighborhood where parking is scarce and tickets are commonplace might end up costing you more than a more expensive place where parking is plentiful, or included in the cost of renting. An awesome deal in a crime-infested area might not feel so awesome when you’re trying to catch a taxi late at night. Be realistic about your budget and your lifestyle.

This post first appeared in Money Talks News.

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