Poor credit can keep you from getting a mortgage if you buy a home. It can also make a difference when you rent an apartment. Often, your credit score is the assurance a landlord needs that you are creditworthy, pay your bills, and are a good risk.
Nothing is worse than completing an application, and going through all the scrutiny of the process, only to find the lease has been denied, and possibly given to another applicant with a better credit score. What can you do to protect yourself, and have a chance if you have bad credit?
First of all, know your score – don’t be surprised. You can begin by telling your prospective landlord up front, and offering to take some steps to make your application stronger. These include:
1. Write a personal letter with your rental application, explaining what has contributed to your credit rating. If you had a temporary setback that has been resolved, such as medical debt or loss of a job due to downsizing or company closing, the landlord can see that your problems are in the past and can consider that you are not just someone who habitually does not pay bills.
2. Get a letter of recommendation from your current landlord, showing that you have a history of payment on time, and a good record as a tenant. The letter should include the length of time you were a tenant, and contact information for your current landlord.
3. Get a letter from your employer proving that you have a job, and for how long you have been employed.
4. Consider a co-signer, such as a parent, relative, or close friend. This can be embarrassing and difficult, but in some rental markets it is necessary if your employment history isn’t very long even if your credit is good.
5. Offer to pay a larger security deposit. You can also show them the money up front by offering to pay several months in advance.
You might want to focus on small owners, rather than large property companies, if that is possible. Large companies often have multiple applicants for each unit, and will likely accept the applicant who has the strongest history and application. An individual owner with a small portfolio of properties may place less importance on your credit score and more on your history with another landlord, your present employment situation, and your references.