Credit Scoring

Getting approved for a rental property with bad credit can be difficult since most landlords require an extensive credit check. Of course, you might be able to find a small apartment complex that doesn’t require a credit check, but don’t expect it to be a five-star property.

If you have negative entries in your credit report, don’t panic—you can still rent with bad credit by following these tips.

Get a co-signer

A co-signer is a person who acts as a “guarantor” in the event that you default on your lease. In other words, if you are unable to pay your rent, then your co-signor will be held responsible for covering the balance. This is a great way to mitigate risk if you have bad credit, and it can alleviate a landlord’s fear of default.

Whether you ask a friend or a relative to co-sign on your lease, make sure this person has a stable income and exceptional credit otherwise it can make your situation look worse. If you can’t find a co-signer, then try to find a dependable roommate with a solid rental history to be on the lease as well.

It’s important to note that having a co-signer doesn’t give you a “freebie” to skip out on your rent. By doing so, you could actually put your co-signer at risk, so always pay your rent in full each month if you can.

Check your credit report for errors

According to a recent study by the Federal Trade Commission, roughly five percent of people had errors in their credit report that could have resulted in lower credit scores. While these errors can be damaging to your credit score, you can dispute them and correct the mistakes.

The best way to contest an error in your credit report is to submit a dispute with all three credit-reporting agencies—Equifax, Experian, and TransUnion. Most disputes are filed electronically, and you can set up email notifications so you always know the status of your credit investigation.

To ensure that your credit score is accurate, always check your credit report so an error doesn’t keep you from getting approved for a rental property. You can go to AnnualCreditReport.com once a year for a free credit report.

Submit an explanatory note

Legally speaking, you’re entitled to submit an explanation to the major credit-reporting bureaus to clarify why you have a “blemish” on your credit report. This note can be viewed every time your credit is checked and it can be a great way to show how you’re working to correct any problems.

For example, if you were evicted because you lost your job in a massive lay-off, then it’s a good idea to make note of that in your credit file. A well-written explanation will not only show that you care about your credit, but it can also show the landlord that your credit problems are behind you.

Pay a large security deposit

You may be able to sway a landlord that is particularly risk-averse if you offer to pay more money upfront. Some landlords require you to pay more in security deposits if your credit is less than perfect, or you may have to pre-pay two or three month’s rent before you can move in—but it’s always better to pay more than what’s required if possible.

Bottom line, money talks. If your credit score is a little low, put some money aside before you start looking for an apartment so you can show credit worthiness without having to rely exclusively on your credit report.

Get a letter of recommendation

A letter of recommendation is another way you can demonstrate your credit worthiness despite having bad credit. This letter should come from a reputable person that can speak intelligently about your financial picture, so don’t expect your parents or your childhood friend to “put in a good word for you.” The best way to get a convincing recommendation for credit is to ask your previous landlord, bank, or current employer to write a letter on your behalf.

If you have unpaid utility bills or you’re still past due on a credit card payment, then make sure you pay these off immediately. Once you’re caught up, ask the business to write a letter that states you have paid the balance in full. The more documentation you can submit that indicates your finances are in order the better off you’ll be.

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