How to Get an Apartment with Bad Credit
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Apartment hunting can be fun—but it can also be a major headache. When my fiancee and I were looking for our first apartment in Chicago, we were surprised to find out just how many hoops management companies wanted us to jump through when filling out a rental application. Potential landlords required a credit check and a security deposit in the form of our first month’s rent and, in some cases, an application fee.
Since my fiancee and I had relatively new credit (we were recent college graduates at the time), it was helpful to have a co-signer and sign a 2-year lease to be more competitive applicants. This is a strategy that can be helpful for anyone with no or bad credit; however, it’s not the only option. Keep reading to learn more about other ways to rent an apartment if you have bad credit.
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Why does your credit get checked when renting an apartment?
While it may seem unfair to renters, when you put yourself in the shoes of a landlord, it’s relatively clear how a renter’s credit history could be a helpful tool in evaluating rental applications. If you’re a landlord, you want to make sure that you get your monthly rent payments each month, as you rely on that income to manage your property and live your life.
Property managers can get a better understanding of someone’s likelihood to stay on top of rent payments by scrutinizing their credit score, as that will report back on how they are managing other aspects of their personal finance. Since payment history has a major impact on your FICO Score, a bad credit score may be a reason for a landlord to tread lightly when considering your application.
One company is working to make it easier for you to stay on top of your credit profile: Credit Sesame.
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Check your credit report, so you know where you stand
To put your best foot forward as a renter, you must know your credit score before applying to rent an apartment. Arming yourself with information helps you present yourself in the best light and is relatively simple to do.
For starters, you’ll want to know your credit score from all three major credit bureaus (Experian, Equifax, and TransUnion). Heading to annualcreditreport.com is a simple way to get that information quickly and for free.
Once you’ve pulled your results, make sure to double-check that all of the information is accurate. One of the simplest ways to raise your credit score is to remove any inaccuracies on your report, so if you see a credit card or loan that you’ve paid off with a balance still reflected, you’ll want to submit a request to remove the error from your account.
Strategies to get an apartment with bad credit
If you have bad credit, here are a few things you can do to make yourself more attractive to a landlord or property management company. While not all of these tactics are sure-fire solutions, many of them can help move the needle enough that you can be approved as a renter.
Offer a larger security deposit
One way to ease a landlord’s concerns about you is to pay more upfront when you sign your lease. A larger security deposit can act as the right kind of collateral to showcase that you’re serious about renting an apartment and are doing so in good faith. A large security deposit also gives the landlord more of a safety net when agreeing to rent to you.
Have a previous landlord go to bat for you
If you aren’t applying to rent an apartment for the very first time, your rental history can be used to your advantage. Offering the contact information of your previous landlord or property manager can be a helpful strategy since one landlord wouldn’t lie to another about something as serious as missed rental payments or an eviction.
Sign up for automatic payments
One way to gain approval with bad credit is to enroll in automatic payments. If the landlord or property management company is using a rental management system that comes with its own payment processor, having your rent automatically deducted from your bank account each month can help ensure that your landlord gets paid on time.
Keep in mind that these sorts of systems often have heavy fines if a deduction is attempted with insufficient funds, so only sign up for automatic payments if you’re confident that you’ll be able to pay your rent each month. Additionally, note that some landlords exercise a more old-school method of renting to tenants and may only accept paper checks instead of automatic deductions from your checking or savings account.
Share reference letters with the landlord
Letters of recommendation are for more than just job and college applications. Sometimes, having a coworker, boss, or former teacher explain your situation can help to sway a landlord. If you have legitimate reasons that your credit fell into disarray, having a letter that speaks to that—as well as your reliability and trustworthiness—may help you rent an apartment despite a negative credit score.
Provide proof of funds
If you have a high balance in your checking or savings account, sharing some bank statements to illustrate that you have more than enough money to pay for your lease can also be a good way to show a landlord you’ll make your rent payments on time. Especially if you can pair your bank statements with other proof of income, your rental application may be looked at much more favorably.
Get a co-signer
While not everyone has a family member willing to co-sign on a lease with them, it can be a great strategy to consider if you’re someone who does this. Remember that a co-signer is different from a guarantor, so it’s important to make sure that your co-signer understands their financial liability if they decide to co-sign on a lease with you. A co-signer’s responsibility is immediate when they sign the lease. A guarantor differs from this arrangement because a guarantor’s responsibility only kicks into effect if you start missing payments.
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What to know about lease guarantor companies
Some companies, known as lease guarantor companies, exist to help you find an apartment to live in even with no credit or bad credit. These companies specialize in people whose finances and credit scores have taken a hit from divorce, foreclosure, or even an eviction. Instead of paying an extra fee to your landlord in the form of a security deposit, paying them for their service could help guarantee your lease and give you more flexibility to choose where you want to live. Many of these services are local, so do some Googling if this seems like an avenue you’re interested in pursuing.
Costs and fees
When it comes to costs and fees associated with getting an apartment, landlords and locations tend to vary greatly. For example, in a city like Chicago, it’s not unheard of to need to pay your first month’s rent on signing, as well as your last month’s rent in the form of a security deposit. Depending on how many bedrooms you’re looking at or the neighborhood you’re renting in, this could be a security deposit ranging from $800 to $2,500. Some landlords also have non-refundable application fees that range from $25 to $75, which are also required if you want to apply for an apartment.
In a city like Los Angeles, fees can be even more expensive. For example, while average rent in Los Angeles is about $2,500, it’s not unheard of to be charged up to three months' worth of rent as a security deposit. That means that if you’re moving to LA to pursue your dreams in film or television, you may need to pay $10,000 just to land an apartment.
Location, size of the unit, and even the time of year you’re looking to rent can all play a role in how much an apartment is—and impact some of the strategies outlined below. Keep these sorts of fees in mind if you’re banking on your checking and savings account statements helping to mitigate your poor credit.
Pros and cons
You might think that there aren’t any drawbacks to getting an apartment—especially if you’re fighting an uphill battle against a bad credit score. However, there are some pros and cons to weigh when it comes down to applying for an apartment with bad credit. Some of the cons may even be a reason to wait and reflect on whether now is the best time to rent or not.
Pros
- Get into a rental unit. If you want to rent an apartment, you will need to have your application accepted somewhere. Using the tips above allows you to find and rent an apartment, giving you shelter even with your bad credit.
- More variety when choosing an apartment. While there are apartment complexes that offer rentals without credit checks (or with lower minimum thresholds for credit scores), those places may not be up to your standards or in the location you’re wanting to live.
- Doesn’t require too much effort. While it can be difficult to ask for a co-signer or a letter of recommendation, many of the solutions and strategies for getting an apartment with bad credit are relatively straightforward and require minimal legwork on your part.
Cons
- Co-signing can be risky. Co-signing has the potential to hamper one of your relationships if you aren’t on top of your rent. As such, you should think carefully before asking someone to co-sign on your apartment lease—even if they are a close relative.
- No guarantees you’ll get the apartment. The strategies above can help you get your rental application accepted, but, if the landlord or property manager in question has strict policies regarding credit checks, no amount of bank statements or letters of recommendation will help you get the unit you want. In those situations, co-signing may be your only realistic option.
- Not everyone has a network they can count on. For the most fool-proof way to rent an apartment with bad credit, you’ll need to rely on your personal network to find a co-signer. However, it’s important to remember that not everyone has family members or friends to count on for something like this.
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The bottom line
Just because you have a low credit score doesn’t mean you can’t become a renter and get the apartment of your dreams. However, it does mean that you have to be proactive and know how to present yourself in the best possible light.
Offering a larger security deposit, getting a co-signer, or providing letters of recommendation in your support can all help to assuage a landlord’s worries when it comes to your credit score. If you have a high-paying job (or a lot of money in your bank account), it may also be helpful to provide your proof of funds. On the other hand, if you have a good amount of money and can afford to wait to move, paying off your debts more and raising your credit score could be just as helpful when it comes to getting an apartment.
While getting a co-signer is the closest to a guarantee on this list, some landlords may still be wary of co-signers and choose an applicant who doesn’t have an extra hurdle. Even so, it’s still worth trying everything in your power to try and get the apartment of your dreams. Remember that you are working to appeal to a landlord or property management company by showcasing your reliability despite your credit score, and you may just sign the lease on the apartment you’ve been hoping to call home.
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Writer
Brent Ervin-Eickhoff is a Chicago-based writer, stage director, and filmmaker with a background in digital marketing and content creation. In addition to Joy Wallet, Brent has written for Complex, Volkswagen, HowlRound, Picture this Post, and Third Coast Review, among others. He currently serves as the Associate Director of Marketing for Content Creation at Court Theatre at the University of Chicago. Brent graduated from Ball State University with Academic Honors in Writing.
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