Good credit is essential not only when buying a home, but also when applying for a small loan, buying a car, and even leasing an apartment. That’s because a credit score is an indicator of how likely a person is to make their payments on time. Getting an apartment with no credit history might be difficult, but there are ways to manage it.
When it comes to renting an apartment, your credit history will show your potential landlord your ability to pay monthly rent on time and whether certain precautions are necessary to ensure that you will do so, like requiring a higher security deposit.
But, it’s also common not to have credit established yet if you’re renting while you are still in college or if you’re moving into a place on your own for the first time. Fortunately, there are solutions if you’re in this situation.
How to Rent an Apartment with No Credit
Whether you’re renting from a private landlord or a large property management company, it’s rare to find apartments for rent with no credit check required. Virtually all landlords need to ensure that you are financially responsible and able to pay your rent according to the terms of your lease. So, even if you lack a credit history, here are 7 ways you can still get the apartment you want.
1. Get a Co-Signer
The most common solution to securing an apartment without a credit check is to get someone to co-sign for you on your lease. Usually, this is either a parent, a family member or a close friend. Notably, it’s important that your co-signer has good credit, and that they understand that they’ll be liable for your rent payment should you fail to pay it on time. Additionally, in the event that you don’t make your payment, this option gives the landlord a safety net to know that there is someone who has to make it for you.
2. Provide References and Recommendations
If you don’t have anyone who is willing to co-sign your lease, getting a recommendation from employers, professors, and especially previous landlords can be extremely helpful in obtaining an apartment without credit. These references provide assurance to your potential landlord that you have been financially responsible and dependable in the past, therefore, increases your chances of being approved.
3. Get a Roommate with Good Credit
You’re more likely to be approved for a lease if you’re moving in with someone who has good credit and your combined income is good enough to cover your rent. However, just because you don’t have a credit history doesn’t mean you should take advantage of your roommate’s. Rather, hold up your end of the deal and make sure to pay your part of the rent each month. Doing so will help you build credit for the future.
4. Show Proof of Income
Showing proof of income, and a savings balance, if you have one, can convince a future landlord to rent to you even if you have no credit. However, your income also has to demonstrate stability and consistency, which will give the landlord the assurance they need. A general rule of thumb is that your income should be about three times the amount of your monthly rent. Furthermore, if you provide your savings balance, there should be enough to cover several months’ worth of rent. Choosing an apartment that is within your means shows that you’re financially sound and able to afford the rent.
5. Explain Your Financial Situation
It’s often helpful to communicate with the landlord and explain your credit history situation, or lack thereof, as it can greatly influence their decision to enter into a lease with you. As long as the reason is legitimate and you can provide some assurances that you will hold up your end of the deal, you may have a chance.
6. Offer to Move in Immediately or on a Shorter Lease
Vacant apartments are costly for landlords. So, it’s in their best interest to keep them full. For this reason, if you are able to move in right away, you may convince the landlord to allow you to rent without a credit history. Along the same lines, offering to rent month-to-month or with a shorter lease term may also be beneficial to you. This way, you can demonstrate that you are a reliable and responsible tenant and the landlord may eventually extend your lease to a longer term.
7. Pay a Larger Security Deposit
Without being able to check your credit record, having the money in hand for a couple months’ worth of rent will definitely make the landlord more comfortable with having you as a tenant. However, this doesn’t mean that you won’t have to pay rent for a couple of months. Instead, this money will be in the form of a security deposit that will be held in escrow and returned to you at the end of your lease if all goes well. Just make sure to pay your rent on time each month and that the amount of the security deposit is clearly listed in your leasing contract.
Although landing an apartment without a credit history is possible and paying rent on time every time is a great way to start building great credit, it’s also important to work on building your credit for the future.
How to Turn No Credit into Good Credit
Lacking credit history is not a bad thing and you can start working on your credit whenever you want. In fact, it’s easier to build good credit from scratch than to fix bad credit. Here are some ways to get started:
College Student Credit Card
One of the easiest ways to kick off your credit history is by opening a credit card. Plus, if you’re a student, they’re pretty easy to get even if you don’t have a credit score. The only difference is that the bank will likely give you a lower credit limit at first, which will gradually increase you make your on time payments.
Secured Credit Card
Another option is a secured credit card, which is backed by a security deposit. In this scenario, you’ll still receive a credit limit, but it will be determined in part by the amount of your deposit. You’ll also still need to make your monthly payments on time for the credit you use in order to ensure that your credit history starts off well.
The most low-risk and simple way to build credit is by becoming an authorized user on another person’s credit card, such as your parent’s. If you choose this option, make sure that the other person’s credit score is good. Additionally, if you do use the credit card to make any purchases, be sure to repay that person to avoid ruining both of your credit scores. Even though you have zero liability as an authorized user, it’s still important to be responsible when it comes to credit use.
So, if you’re looking to sign your first lease or buy a car or are planning for a future mortgage and have no credit, take advantage of the clean slate and be smart about your credit.