Having a low credit score makes life more difficult. The bottom line is that getting apartments for people with bad credit takes work. Just like securing a home loan with bad credit, you may have to turn to alternative solutions such as bad credit loans.
The good news is that it’s not impossible. With some hard work, thorough research, and persistence, you should be able to find a suitable apartment even with a low credit score.
Understanding the Process to Rent an Apartment
Before you even begin understanding the ins and outs of getting an apartment with bad credit, it will be helpful to better understand the rental process, especially if you have never rented.
The Rental Application Process
The rental application process can vary from one landlord to another. However, you can generally expect to fill out a paper or online rental application.
You may be asked about your income, expenses, past rental history, whether you have pets and personal information about yourself and any other tenant. You will also likely be asked permission to undergo background and hard credit checks. It may be helpful to know that the majority of landlords now screen for credit score, payment history, criminal record, and income.1
A hard credit check allows your landlord to pull your credit report from each of the major credit bureaus. They can check your credit scores and history to determine their risk from here. Similar to how lenders work.
If approved for renting a place, you must sign a lease, which is usually a year long. A security deposit and the first month’s rent may also be due.
The Parties Involved When You Rent an Apartment
Here is a general list of the different parties that may be involved with renting:
The landlord is the person or entity who owns the rental property. Rent is paid to them, and they will be responsible for keeping the property in livable condition for the tenant.
The Tenant or Tenants
The tenant will be occupying the rental property. They will be responsible for following the rental agreement rules, including making monthly rent payments. With a bad credit score, you may have to have a larger security deposit.
Sometimes, a landlord may hire a maintenance person or crew to care for the property. You, as a tenant, should have their contact information.
The Property Manager or Property Management Company
An individual or property management company hired by the landlord to manage the daily operations of a rental property. Responsibilities can include finding and screening tenants, collecting rent, handling maintenance and repair issues, and initiating evictions if necessary. So
A Leasing Agent
A leasing agent helps facilitate the rental process, from showing properties to assisting with lease paperwork.
Legal or Paralegal Professionals
A landlord may have a legal team or representative they consult if any issues arise.
The Rental Agreement
The rental agreement is a massive part of the renting process. It will usually have information on the following:
- Parties involved
- Rules and regulations
- Details on the security deposit
- The date of each month that rent is due
- Rent amount
- The length of the lease
- Renewal or termination details
Both the landlord and tenant will have to sign this loan agreement. Before signing a lease agreement, it is imperative to read and understand it completely. Also, ensure that you can make your rent payment every month. Once you sign, you are legally obligated to ensure you follow everything on it.
Consequences of Breaking a Lease Agreement
If you break your lease, there can be consequences, including but not limited to:
- Negative impact on your credit score
- Loss of your security deposit
- Collection accounts
- Financial consequences, including fees and penalties
- Legal action
The most obvious way an agreement can be broken is if you fail to pay rent; however, there may be other less obvious ways to break a lease. And that is why it is so important to read it carefully and review it periodically.
Assessing Your Credit Situation: Start With Your Credit Report
Before you look for a rental, assessing your credit will be helpful and essential; that way, you’ll better understand your options. The easiest and most comprehensive way to do this is to pull your credit reports from each of the three major credit bureaus. Your credit report will have your credit history and credit scores (usually). Everyone is entitled to one free credit report from each credit bureau annually.
Your credit score should give you a good idea of where you stand with your credit. The most popular scoring models are VantageScore and FICO Score; they have different credit score ranges.
The average credit score of Americans in a 2021 report was 688 for the Vantage scoring model and 711 for a FICO model.2 With a VantageScore, anything below 601 is considered bad credit. With FICO, anything below 580 is also considered a bad credit score. Having a poor credit score can make it more challenging to rent an apartment, but not impossible. One thing to keep in mind is that rent payments typically do not affect credit.
Building Credit or Improving Bad Credit Over Time
If you don’t have any credit or are trying to improve bad credit, you should know it can take some time. However, there are effective and relatively simple ways to build a good credit history over time. Here are some tips to improve bad credit or build positive credit:
- Look at credit-building tools such as secured credit cards and credit builder loans.
- Make your credit account payments on time. Positive payment history is essential to help a bad credit score, as it is the most significant factor that impacts a credit score.
- Keep your credit utilization below 30%.
- Diversify your credit mix.
- Refrain from new credit inquiries.
- Keep your debt-to-income ratio low.
Do No Credit Check Apartments Exist?
While finding an apartment without the landlord running a credit check is possible, it certainly isn’t common. Most landlords and property management companies make it a policy to run credit checks on all new applicants. It’s an easy way for them to see your payment history and understand how you take care of your financial obligations.
If you have bad credit or even no credit at all, it will take some research to find a landlord or property manager willing to work with you. There also may be realtors that work with bad credit that can help with renting. But don’t be discouraged; no credit check apartments exist, and CreditNinja is here to help you figure out how to get one.
How To Find Apartments for People With Bad Credit
Like any other apartment search, several websites allow you to search for apartments in any given city. These sites will usually give you the contact information for the property owner. This will enable you to ask questions about the application requirements. Whichever site or service you choose, here are a few things to consider during your search:
Look for Apartments With Private Landlords vs. Property Management Companies
You’ll be more likely to convince and explain your financial situation to an independent property owner/private landlord that you can make payments rather than a property management company’s strict credit score policies.
Prepare To Show Proof of Income To Pay Rent
It’s a good idea to go into the search, already having bank statements for the past 90 days. This will be an excellent way to prove that you have the income required to make your rental payments.
Look At Subsidized Housing for Higher Approval Odds
Subsidized housing provides opportunities for low-income individuals and families to find accommodation. While subsidized housing is primarily designed to assist low-income individuals and families, it may also help bad credit applicants. And while income is the primary criterion for eligibility, other factors, including credit history, can play a role in the application process.
Find a Landlord That Will Allow You To Use a Cosigner
Using a cosigner means that if you don’t make your payments, your cosigner becomes responsible. A cosigner should be a close family member or friend with good credit. This may put the owner at ease since they’re more likely to be paid, even if you drop the ball.
Knowing what to look for when apartment hunting will help. Use these tips to get started, and consider asking someone close to you whether they’re willing to be your cosigner.
Use Previous Landlords for References for Rental History
If you have rented before and have a positive payment history, then it will be worthwhile to show those references. A positive rental history can be a huge plus when looking for an apartment with bad credit.
What Are Month-to-Month Apartments?
With most apartments, tenants sign a lease for a set amount of time. Usually, an apartment lease is for one year, but it can vary depending on the landlord. On the other hand, a month-to-month lease has no set end date, and the tenant or landlord can terminate the lease at any time.
Depending on the laws in your area, you may be required to notify the landlord that you’re moving out within a specific time from your move-out date. This could be as little as one week or as much as 90 days.
A month-to-month lease is more flexible because you aren’t committed to an entire year in the apartment. If you have poor credit, this could be something the landlord is open to since they can also terminate the lease at any time. That being said, many landlords will prefer a long-term commitment so they don’t have to fill the apartment again so soon.
This is another important option to discuss with a potential landlord. When reaching out to landlords and owners, find out if they’re open to this option, and if so, what the terms of the lease would be.
Finding an Apartment If You Have Previous Evictions
There’s no denying that getting apartments for people with bad credit will be difficult. And having an eviction will make it even more difficult. Again, it’s not impossible, but it’s not easy either. This will likely only work out if you’re able to prove you have a steady income. But there are some additional tips to remember:
|Tips to Address Eviction on Your Record||Description|
|Reach out to your previous landlord||Pay off any money you may still owe them, and request that they remove the eviction from your credit history.|
|Find a landlord or property owner||Seek a landlord or property owner who doesn’t perform background checks.|
|Find a roommate with a decent credit score||Consider finding a roommate with a good credit score to reassure the landlord about rent payments.|
|Consider using a cosigner||If you have poor credit, think about using a cosigner to provide additional security for the landlord.|
FAQs About an Apartment With Bad Credit
A credit report provides detailed information about your credit history and behavior. Key components of a credit report include:
– Personal Information
– Credit Accounts (installment loans, credit cards, payday loans, etc.)
– Public Records and Collections
– Credit Score
While the ideal credit score can vary among landlords, many typically look for scores above 620. However, scores below this threshold don’t automatically disqualify applicants, especially if they have other strengths like a stable income or a positive rental history with previous landlords.
Some landlords may be more inclined to rent to someone with bad credit if they offer a larger security deposit or several months of rent payment in advance. However, this varies by landlord and local regulations.
A “soft” check doesn’t affect your credit score and typically offers a cursory look at your credit standing. In contrast, a “hard” check can slightly reduce your credit score for a short period and offers a detailed view of your credit history.
Some cities or neighborhoods with a surplus of rental properties might have landlords who are more flexible about your credit score, especially if the rental market is not highly competitive. Research and local insights can be valuable in identifying such areas.
Yes, several non-profits and housing assistance programs aim to help individuals with compromised credit or low income find affordable housing. It’s beneficial to research local organizations in your area for support.
Key Takeaways from CreditNinja
The most important thing you can do for yourself when looking to rent an apartment with bad credit is to work on improving your credit score. The best way to do this is to pay off your current debts, lower your credit card debt, and learn how to budget and manage your money.
By improving your credit score, you’re not only opening yourself up to better housing opportunities but also auto loans, mortgages, and other financial products. Do your research and be persistent; eventually, you’ll find some good apartments for people with bad credit. To learn more about budgeting and other financial tips, check out the rest of the CreditNinja Dojo!
- Rental History Report: Statistics All Landlords Should Be Aware Of
- Landlord Guide: What Is A Good Credit Score For Tenants? | RentPrep
- How to Rent an Apartment With Bad Credit | Apartments.com
- How to Land an Apartment With No Credit History | Rent.com
- How to Get an Apartment With Prior Eviction | Apartment Search