Advice for renters: managing your terrible credit
Okay, so your credit’s not so hot – don’t worry we’re in the trust tree, no one is here to judge. We are here to help you figure out how to manage your ugly credit history if you are looking for a place to rent, because these landlords seem to be really fixated on this whole credit thing. Here are some suggestions to ease your rental search despite terrible credit:
- Don’t get your credit checked. There are landlords out there who don’t bother with credit checks – the trick is finding them. Someone renting only a single unit or handful of properties is your best bet; check Craigslist or the newspaper classifieds. Some local social organizations may have lists of landlords who do not require checks, and if your city has a renters’ rights organization check with them also.
- Accentuate your positive rent payment history. More and more landlords are looking at other considerations than simply credit history… otherwise, how are all these people with busted mortgages on their reports going to find places to live? One leading indicator is payment history – if you have a proven track record of paying your rent on time, you will look good to a landlord despite a spotty credit report. Some management companies have access to rent payment histories as part of the credit report. Otherwise, make sure your prospective landlord gets in touch with your previous landlords to verify your sterling rent payment history.
- Tell your side of the story. If there’s a particularly black mark on your credit, federal law allows you to append a 100-word explanation to your credit file. Take this opportunity to tell your side of the story: it not only shows you care about your credit, but some landlords are sympathetic to hardships created by the current economic climate.
- Make your case. Your credit report is only one look at your finances: put together a complete look at everything you are doing right. Get together a sheaf of paperwork to present to the landlord along with your rental application. This might include your 4-6 most recent bank statements, pay stubs, and references from people that matter. This can provide a counterbalance to your credit report and demonstrate that you are on the straight and narrow.
- Pay through the nose. Nothing says “I am good credit risk!” better than cold, hard cash. Offer to pay an additional month deposit. Or, if your report is really ugly but you have cash on hand, offer to pay 6 months rent up front. You can also get creative and set up an escrow account with your rent, or offer to make it pay automatically from a bank account or credit card.
- Get a co-signer. Also known as a “guarantor,” your co-signer doesn’t live at the property but assumes liability for rent payment if anything goes wrong. Obviously, you need someone with substantially better credit than yours… Mom and Dad?
- Ask for a short term lease. Most landlords are eager to lock places up for longer periods, but some may agree to a short term lease to see how things work out. Month-to-month gives a landlord some added flexibility if it goes south.
The most important thing is stay positive and keep looking. Landlords are increasingly encountering otherwise good renters who have dismal credit reports because of the mortgage crisis. If your credit is bad, make sure you draw attention to everything that makes you a good renter.