Renting with Bad Credit is Possible with these Practical Tips
Bad credit is no reason to stop you from renting a house. In fact, according to AOL’s Daily Finance, it’s the best option for anyone already reeling from a low credit score. Compared to buying a house, which entails getting a mortgage, for those with bad credit renting is lighter on the pocketbook. The former means servicing a loan with high interest rate, proving that in the long-run renting has more upsides.
First you need to understand how bad credit affects renting a house. Renting, according to Fox Business, is similar to getting a car or a property. Before gaining further inroads, “landlord will check your credit,” to ensure that you’ll be capable and responsible in meeting the monthly dues. Clearly, with a credit score that is below par, it’s difficult to prove your creditworthiness.
There are effective ways, however, to deal with the situation. Either you have to prove that your bad credit score will not make you a delinquent tenant or you’ll find other means to land a decent property. Let’s deal with the second option first.
Modify your house hunting.
Considering your credit credentials, you need to strike out the premium locations from your list. Look for homes that have been languishing in the rental market for some time. For these low-demand properties, you’ll find that “the renting terms are less stringent,” according to the San Francisco Chronicle. Notwithstanding your bad credit, renting in these sectors should be an easy prospect.
Deal with individual property owners.
To enjoy flexible terms, “apply for leases where you can have direct and accessible communication with the landlord,” CBS News said in a report. Dealing with the biggies usually means submitting yourself to unbendable rules. With landlords who own smaller amounts of properties the chance is higher they’ll accommodate the reasons behind your undersized credit score.
Try some bargaining.
Normally this is possible in slow moving areas, where apartments or houses go unoccupied for extended periods, and with out good credit standing. Try anyway and start with low demand properties, the San Francisco Chronicle said, in order to get the best deal possible. If successful, document the agreement to make sure that you’re holding onto something concrete in the event of disputes later on.
Now it’s time to demonstrate that your credit report does not speak entirely about your character.
CBS News recommends volunteering your credit score with your lease application. When the process moves into the next level, speak truthfully about the situation. Many landlords can equate honesty with responsibility while at the same drawing the line between bad attitude and bad luck.
Pull up some references.
Support your case with letters from previous landlords attesting to “your track record for paying rent on time, respect for the property and how long you resided there,” CNN Money said. Also, include testaments from entities or individuals that you’ve had financial dealings in the past, which concluded in your good favor. These supporting papers will definitely bolster your position.
Get a co-signer for the lease contract.
This provides added security for your landlord, which is the chief reason for all the vetting procedure. This is the most effective way of sealing a rental agreement, Fox Business said, provided the co-signer possesses solid credit record. You choices could be a close relative or a friend. If you can’t convince them, co-signing services are available for hire.
Prepare to pay a higher security deposit.
Mitigate your credit’s risk factor by setting aside a substantial amount of cash to pay the security deposit attached with the lease. It is a good idea to bump up the level laid out in the terms, according to the San Francisco Chronicle, which should lessen the hesitation on the part of property owners. You can also pay the monthly rent in advance at the start of the agreement. If your cash flow permits, pay three to six months ahead. This act will surely win you loads of confidence points.
Automate the payment process.
When possible, configure your account to send the rent to your landlord’s account in clockwork precision. “A landlord will feel more comfortable if they know that the rental payment is scheduled to automatically come out of your account each month,” CBS News said. This extra gesture on your part will send out the message that you renting with bad credit is not too bad at all.
Consider sharing arrangements.
This may appear desperate but Fox Business views this as a practical way of riding out the crisis. The move is akin to getting a co-signer but this time he or she will actually live with you for the life of the lease contract. Take this as an interim set up that will provide you some breathing room en route to polishing your credit credentials.
Or rent insurance.
CBS News calls this option a last resort. Firms offering such services require fees that are about 75 percent of the monthly rent. While this tool presents security for landlords, the added financial pressure suggests that this should remain at the bottom of your rent solution list.
Press on the credit upgrade task.
It’s important for renters to keep the push on achieving better credit scores, Fox Business said. And higher numbers are realized by honoring all payment obligations – current and previous bills. By doing so, you’ll gradually collect better credit entries that in the future will put you in a stronger position to negotiate for the best lease deal possible.
The bottom line, renting with bad credit is possible because “there are many with less than perfect credit but are still responsible and trustworthy people,” according to CBS News. And many landlords are aware that some cases of bankruptcies and unsavory payment records took place with the credit holders having little or no control of the unfortunate events.