Don’t let bad credit keep you from finding a new home.
It’s hard enough finding a place to live that fits your budget and where you can imagine yourself staying for the long term. But when you have bad credit, this home search becomes even more difficult.
Some homeowners won’t even consider your application if your credit isn’t good enough. Even if they consider it, if someone with better credit applies for the same location as you, the owner is almost certain to choose it.
It’s a frustrating situation, but it’s not hopeless. Here are the best strategies you can use to find a place to live when you have bad credit.
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Rent from a private owner
Some rentals will have much stricter tenant requirements than others. For example, if a property management company is in charge of a rental, you can safely assume that bad credit will be a deciding factor. These businesses generally do not deviate from their minimum income and credit score requirements for potential tenants.
You might have better luck with an individual owner. This is when the rental owner also takes care of management tasks, including tenant inquiries. Individual owners may be more willing to work with you despite your bad credit.
Save and pay more up front
In some cases, you can convince a landlord to try your luck by paying rent several months in advance. It depends on both the landlord and part of the country, as some states have regulations on whether tenants can pay rent in advance.
While paying more rent up front isn’t an option, a large savings balance can still help find a spot. Homeowners typically charge applicants with bad credit a higher security deposit, so having the savings to pay this will help if you are approved. And being able to check your bank account balances could alleviate a landlord’s worries about your financial situation.
Rent a room or sublet
One way to potentially avoid a credit check is to rent to a tenant who already has an existing lease. Room rental and subletting are two good options that you can look for on rental ad sites. Since the tenant is trying to find a tenant in these situations, they will make the selection and likely not do a credit check.
There are some precautions you should take if you go this route:
- Obtain a rental agreement so that you have proof that you are paying rent and that you live there.
- Check that the owner or property management company agrees that you live there. If the tenant is planning to sneak up on you, you better find another place.
It’s also important that you carefully assess any potential roommate because trust me, the wrong roommate can make your life miserable. I have had great roommates in the past. I also had one who got mad at me when he couldn’t find his Star Wars figure.
Provide proof of your income
The biggest concern of a landlord is that you will pay the rent on time. Bad credit is a blow to you, but they may still be willing to hire you if you earn enough money and can provide proof of income.
How much money is enough? A standard rule used by many landlords is that the gross monthly income should be at least three times the rent. If you do more, it’s even better.
Get a reference letter from a previous owner
There are all kinds of reasons your credit score may drop, and a lot of them don’t relate to whether you would be a trustworthy and reliable tenant. By showing a potential landlord that you’ve been a model tenant in the past, you may be able to convince them to approve your application.
If you’ve rented a house before and left on good terms, ask the landlord for a letter of reference.
Find a co-signer
Do you know someone with good credit who is willing to co-sign the rental application? This could help you get approved as the landlord will perform a credit check on your co-signer and base their decision on that co-signer’s credit rating.
Not all owners accept co-signers, so you’ll need to find one that will. It can also be difficult to find a co-signer as they will be responsible if you damage the apartment, fail to pay the rent, or get evicted. But this method can qualify you for a home that you couldn’t get on your own.
A temporary solution
All of the strategies listed above are temporary solutions to help you meet your most pressing need: finding a new place to live. After dealing with this, your next step should be to build your credit so that you do not find yourself in this situation again.
To do this, make sure you pay your bills on the due date and don’t leave any balances on your credit card climb too high. By following good credit habits and keeping an eye on your score, it will end up being high enough that you can easily qualify for any home.
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