As the cost of housing rises so does the number of renters. Buying a home just isn’t as feasible as it once was, especially for the Millennial Generation. However, maintaining a good credit score can also be challenging for many people, and given that many landlords and property rental companies require a credit check before agreeing to lease a unit to a tenant, this presents an unfortunate obstacle for folks who are looking for a new place to rent while establishing or rebuilding their credit scores.
If you fall into this category, then you’re not automatically disqualified from renting. Instead, you’ll just have to look for alternative renting options.
It’s not impossible renting with poor credit. Renting a house with poor credit is possible. You can find a rental while establishing or improving your credit score. Here are a few tipsrenting with poor credit to help get you started.
Demonstrate Sufficient Income & Assets
Poor credit doesn’t always correlate with low income and zero assets. While your credit history might have some poor marks from missed payments, too many new credit lines opened in a short period of time, or coming too close to your credit limit, you could still demonstrate that your income and/or assets outweigh your low credit score.
This might mean you’ll have to put down an extra payment (e.g., first and last month’s rent upfront) or a larger security deposit. But, if you have the funds available, then it could be a useful way to get around the minimum credit score “requirements” set by the property owner.
Rent from Individual Property Owners
If you’re like the majority of individuals with not-so-great credit scores, then perhaps you don’t have the secret weapon of a huge income or stockpile of valuable assets to back up your financial viability as a tenant. There’s nothing wrong with this scenario – it will just require more creativity on your part.
While most property companies and large apartment or condo complexes require credit checks before leasing out their units, individual property owners tend to be more flexible when it comes to their requirements for potential tenants. Go on Craigslist or a local housing Facebook group to find small-time property owners who typically rent for a passive side income because they’ll be more likely to cooperate with your unique situation than a by-the-rulebook property management company.
Get Recommendations
Not having much luck with individual property owners? Another option to try would be getting recommendations from others who have worked with you on a financial basis. Similar to job references, you wouldn’t include a recommendation from a friend or a spouse.
Instead, get recommendations from former landlords (assuming you paid your rent in full and on time), contacts you have with your bank or credit union (who can vouch for the timeliness of your payments) or employer. These recommendations could establish authoritative trust (“Don’t just take my word for it!”) and demonstrate to a potential landlord that, despite your credit score, you would be an excellent tenant during your time living at the property.
Bring a Co-Signer Along
If you don’t have a significant income or amount of assets to your name, then you could overcome a poor credit score on a rental application by adding a co-signer to your file. Some properties do not allow co-signers, while other landlords actively encourage it to ensure their tenants’ financial liability is reduced as much as possible.
A co-signer with a great credit score and solid, proven income could help you secure the home of your dream. But, be sure not to miss any payments or upset your property manager so your co-signer never regrets their decision to help you by adding their name to your rental contract.
Month-to-Month Leasing
If the aforementioned options aren’t working out for you, then month-to-month leasing is another potential idea for overcoming a poor credit score during the housing hunt. This can be a riskier option for you compared to the others discussed above because month-to-month leasing typically means that you agree to leave whenever the landlord asks you to move (sometimes with a grace period to give you time to prepare – you can also choose to leave any month you want to), or the landlord might increase your rent unexpectedly one month (as opposed to a 12-month lease with a fixed monthly rate).
Month-to-month rentals are often more lenient when it comes to credit score calculations because the risk is shifted away from the landlord to the tenant, so be sure to read the fine print before agreeing to anything in a month-to-month lease contract.
It’s not impossible renting with poor credit. Renting a house with poor credit is possible. You can find a rental while establishing or improving your credit score. It may require more extensive home hunting, phone calls, requests, etc. But, ultimately you can secure a home until you’re able to improve your credit score beyond the minimum threshold or save up enough money to put a down payment on your own home.
FAQs
If you have a credit score that's below 620, you will find it more difficult to rent an apartment. You can work around the situation by renting with a smaller landlord, finding a cosigner or guarantor for your rental payments, or getting a roommate.
How to explain poor credit to a landlord? ›
Be honest (and communicate well) about your bad credit.
Be upfront with potential landlords. Write a letter of explanation detailing why your credit score is not very good. Include how you now have good budgeting habits and about your plans to be a responsible tenant.
What is the lowest credit score you can have to rent? ›
Generally, most landlords require applicants to have a credit score of at least 620 to be considered for rental housing. This means that if your FICO score is lower than 620, you may be denied an application or asked for additional security deposits or co-signers before being approved.
Can you get an apartment with a credit score of 500? ›
Yes, renting an apartment with a 500 or below credit score is possible. However, you might not get the apartment of your dreams until that score improves. Fortunately, you can still get a decent apartment if you provide strong proof of income, get a co-signer, or rent on a month-to-month basis.
Should I rent to someone with a 580 credit score? ›
From 740 to 799 is considered very good, and from 580 to 669 is regarded as a fair score. The credit score required to get approval for a rental application varies depending on the landlord or property management company. However, most landlords want applicants with a score of around 625 or higher.
How to justify bad credit? ›
Explain the Circ*mstances Surrounding Your Bad Credit
For example, did you lose your job or experience a significant medical expense? Providing this context can help the employer understand why your credit history looks the way it does.
How to convince a landlord to rent to you with a bad credit sample? ›
Your property is perfect for me and I'd love to rent it! I'm an excellent tenant — I pay on time, I'm clean, and take care of my home as if it's my own. I have poor credit but that's in the past. I'd be happy to explain if there are any questions and I could pay a larger deposit, if needed.
Can I rent with a 300 credit score? ›
If you have poor credit — somewhere between 300 and 579 — it's not impossible to rent an apartment, it just might take a little more work on your part.
What credit score will get you denied for an apartment? ›
Most landlords seek credit scores of 650 or higher as a sign of tenant responsibility. Applicants with scores below 600 may face additional hurdles in securing approval. Exact minimum thresholds vary widely depending on factors like the type of apartment, current occupancy rates, and the landlord's discretion.
What does a landlord see on a credit check? ›
Information included in a landlord credit check includes payment history, the existence of a bankruptcy or accounts in collections, debts currently owed and more. Landlords also consider other information when approving tenants for a rental, including current income and history of employment.
Wealthier, more competitive areas will require a higher minimum score, as will new or luxury buildings. However, a good rule of thumb is that most landlords look for a credit score of at least 600. Anything under 600 is considered bad credit, but don't worry – there are many ways to get around bad credit.
What if my credit score is too low for an apartment? ›
You can work around the situation by renting with a smaller landlord, finding a cosigner or guarantor for your rental payments, or getting a roommate. You could also pay more money upfront or provide additional documentation and references to make your case.
How to pass a credit check with bad credit? ›
Let them know you have a valid reason for a bad report. Have a cosigner: This is a tactic used by students who have little to no credit history. If you have a parent or guardian who can sign your lease as a guarantor, landlords may consider it.
What is the lowest credit score to rent? ›
In general, landlords are unlikely to approve you with poor credit history, but might consider you if you can demonstrate current financial stability. The bottom line is that the score you need varies by location, but you're likely to get approved in most places if your score is at least 650.
How to get around bad credit when renting an apartment? ›
How to Rent an Apartment With Bad Credit
- Pay More Upfront. Most landlords and property managers require a security deposit and the first month's rent upfront. ...
- Provide Documents and References. ...
- Find a Cosigner or Guarantor. ...
- Get a Roommate. ...
- Search for Apartments That Don't Require Credit Checks.
The answer is “no.” A poor credit score doesn't necessarily imply a low-quality tenant. While it does serve as a way to identify potentially high-risk applicants, it doesn't tell the whole story. Other aspects of their application could more than redeem them for this one blemish.
What is a good explanation for bad credit? ›
A person or business is considered to have bad credit if they have a history of not paying their bills on time or they owe too much money.
How do I write a letter of explanation for bad credit? ›
There are a few guidelines that apply to writing a consumer explanation letter, regardless of the situation.
- Keep it short and to the point. ...
- Emphasize the circ*mstances that led to the issue. ...
- Explain how your finances have improved. ...
- Proofread your letter. ...
- Be nice.
Provide a clear explanation: Your letter should acknowledge and indicate why something happened. If, for instance, you fell behind on loan payments in the past or were out of work for a significant period of time, explain the extenuating circ*mstances.
What is a letter of explanation for credit inquiries? ›
The intention of a 'Letter of Explanation' is to provide more insight into certain areas of the borrower's loan application, including: Showing how the borrower is obtaining the money for the down payment and/or closing costs. Confirming whether the borrower recently opened any new credit accounts.
As the cost of housing rises so does the number of renters. Buying a home just isn’t as feasible as it once was, especially for the Millennial Generation. However, maintaining a good credit score can also be challenging for many people, and given that many landlords and property rental companies require a credit check before agreeing to lease a unit to a tenant, this presents an unfortunate obstacle for folks who are looking for a new place to rent while establishing or rebuilding their credit scores.
Not having much luck with individual property owners? Another option to try would be getting recommendations from others who have worked with you on a financial basis. Similar to job references, you wouldn’t include a recommendation from a friend or a spouse.