8 Best Practices for Renting With Bad Credit

Bad credit can inconveniently stand in your way of progress. Consequences of a low credit score include receiving loan offers with very high-interest rates and being denied a credit card. What’s alarming is that even landlords are now performing credit checks on would-be tenants before leasing their properties. Bad credit could be a result of many factors, including loss of employment, sickness, bad financial decisions, among others. Nonetheless, having poor credit is not the end of the world.

Here are the eight tips for renting with bad credit:

1. Improve your Credit Score

One of the best tips on renting with bad credit is to improve your credit score. Even if your credit score is bad at the moment, you can put it on an upward trajectory by paying all your bills on time. Paying bills on time is the most significant contributing factor to your credit score. Start by making sure you pay all your bills in full, on time, and be consistent. Help your future credit score and prevent further damage to your current credit score. You must make timely payments to improve your credit score, which takes a big hit once a bill is 30 days overdue.

In the case of delinquent accounts, put them in good order, remove derogatory items from your report by paying them in lumpsum as you work with the collection agency or creditor. You can also approach a credit repair agency to help you deal with the negative items on your credit report.

2. Provide a Recommendation

A positive recommendation report attests to your suitability to handle the situation at hand. To rent an apartment on bad credit, a real-life testimonial from a previous landlord indicating your positive rental history will vindicate you to the new landlord. This is important to landlords because the ability to pay is not equivalent to a willingness to pay.

3. Know your Actual Credit Report

Before you go hunting for an apartment, understand the details of your credit report. Verify what’s in there should your landlord decide to check. Ensure you have corrected inaccurate information using the credit report dispute process. The lesser the negative information on your credit report, the better the chances of getting approved for an apartment rental.

4. Search for Rentals that Don’t Check One’s Credit

Large property management companies conduct credit checks on people seeking to rent apartment complexes. It’s, therefore, in your best interest to avoid them if you have bad credit. Go for an apartment where the landlord doesn’t do credit checks, which is the case for most properties owned by individual landlords. Such landlords may be willing to take a gamble on a tenant with a reliable income and excellent rental history but poor credit history.

Scout your preferred neighbourhood by looking for “For Rent” signs in the yards. Talk to actual landlords to gauge if they’ll perform credit checks. If not, that’s one thing less to worry about. If they do, make a compelling case to prove you’re a deserving tenant.

5. Prepare to Pay More Upfront

Chances are, with a bad credit history, you’ll be required to pay more upfront than you would if you had good credit. This will take the form of higher security deposits, or one to three months of rent before moving into your new digs. It’s advisable to start setting some cash aside and begin searching for new places as soon as possible. You may even want to get payday loans to have the ability to pay more upfront.

6. Get a Co-Signer or Guarantor

Get someone to co-sign your lease. Your co-signer must meet the necessary credit qualifications. Besides, they should have good credit. It’s, however, advisable to avoid using other people’s credit. If you have to be extremely careful with it, more than you would be with yours. Keep in mind the fact that if for whatever reason you default, the landlord can legally go after the co-signer for the actual value of the lease.

7. Have a Provable Steady Income

Solid proof of your income is needed. This includes a letter from your employer indicating your income and employment status, tax returns, and two to three months of pay stubs. Sufficient income easily offsets an adverse credit history. Having three to four times above the monthly rent requirements shows you can afford monthly rent payments. Offer to pay via direct deposit to improve your credibility and chances of securing a rental.

8. Get a Roommate

If sharing is an option, get a roommate who is willing to sign for it solo, that’s if your landlord permits just one individual to sign the lease. Alternatively, move in with a roommate who is in mid-lease. They can add you to the contract without a further credit check. The lease will bear the name of the person with the most reliable credit. Other roommate benefits include shared bills, which, in turn, lower your financial burden. This will give you breathing space to start repairing your bad credit while reducing your debt burden.

Bad credit history can be improved, and a positive outcome derived from it. It, however, calls for financial discipline and sacrifice.