How To Rent An Apartment – If you are looking for an apartment with a low credit score, you may already know how difficult it can be to rent with bad credit, which means you have negative information on your payment history, no good credit score, or a combination of both. Most landlords run credit checks on their tenants and associate good credit with a responsible tenant, so a potential landlord can turn down a potential tenant based on a bad credit score.
In this guide, we’ll explain the minimum credit requirements to rent an apartment, ways to rent with bad credit, what landlords look for in your credit report when evaluating your rental application, as well as strategies to help you find a home no matter what your credit score is.
How To Rent An Apartment
If your credit score is in the “fair” FICO® credit score range (from 580 to 669), potential landlords can take a closer look at your credit report to get a better idea of your credit history and borrowing habits. [1]
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However, landlords consider more than just credit scores when evaluating potential tenants, and if they have a threshold for what an acceptable credit score can be, that number is at the discretion of the individual landlord or property management company.
While landlords may use the FICO® credit scoring model to help them make decisions, each landlord has their own way of determining a tenant’s risk level, so there is no set credit score that determines whether you qualify to rent. The monthly rent payment, the state of the real estate market and your income are also factors.[1]
If you have bad credit or a credit score that doesn’t meet the minimum for a potential landlord, you can still rent if you can prove you’re a good tenant. Here are some strategies you can try that can make up for a bad credit score.
Reference letters from previous landlords or property management companies act as letters of recommendation and can help provide credible evidence of a positive rental history and that you pay rent on time.[2]
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Landlords consider your income to ensure you have enough funds to pay your rent each month and on time. Providing proof of your income, such as recent pay stubs, W-2 tax forms, or bank statements, can help convince potential landlords that you can pay in full and on time.[3]
Experian Boost®[4] is a free service that adds qualifying bill payments, such as utility bills and streaming services, to your Experian credit report. While not all accounts are eligible, if you’ve been paying eligible accounts regularly and on time, adding them can help boost your FICO® 8 score immediately.[4]
Results may vary due to your individual financial situation and the fact that this tool only affects your Experian credit report and FICO® 8 credit score. So if your lender uses credit reports prepared by the other two major credit bureaus, TransUnion and Equifax, or another scoring model , your report and score may not be affected.
If you are struggling with your credit, you may want to consider a co-signer. A co-signer is someone who signs the lease for the new apartment with you and has equal responsibility for paying the rent. They can live with you under a tenancy agreement. A cosigner with good credit and payment history can help increase your chances of approval.[5]
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You can also consider a guarantor, someone who can vouch for you financially and cover your rent payments if you can’t. Guarantors do not have the right to live with you, but they are required by law to pay rent if you do not.[5] Guarantors usually have a good credit history. Tenants often ask a close friend or family member to be a guarantor.
Whether you get a co-signer or guarantor, if you miss a rent payment, the financial responsibility for the payment falls on them. Late or missed payments can affect their credit score in addition to yours if the landlord reports the rent to the credit bureaus.[6]
If none of the above options are possible for you, here are some other avenues you can take if you are trying to rent with bad credit.
If you have a bad credit score or have had recent problems with your personal finances, such as a sudden, short-term job loss that left you with credit card debt, it may be easier to try to explain your current financial situation to your potential landlord. Because every situation is unique, landlords may be willing to listen and work with you. Make sure you prepare all the documentation needed to support your claim, as well as some that show you can be financially responsible as well.
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Applying for an apartment that does not require a credit check may give you a better chance of approval because the landlord does not check your credit.[7] Instead, landlords look at your income, debt-to-income ratio, past bankruptcies, delinquencies or criminal history.[1]
Be careful though – apartments without a credit check may have higher upfront fees or confusing lease terms. So read your lease to make sure you understand all the terms, can determine that the rent is fair, and inspect the apartment to check for safety issues that may be an issue that you need the landlord to address before you sign.[7 ] ]
Private landlords are individual property owners who choose to rent out their properties themselves instead of renting through a property management company. Private landlords are usually more flexible and have fewer restrictions compared to large property managers.[8]
Paying a higher security deposit can help make a good impression on your landlord. Paying more upfront can show that you are financially committed to the rental. Paying your rent in advance can also help.[2] Just make sure you don’t overstretch your funds so you don’t run the risk of missing payments on other financial obligations.
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The federal government offers a program to help very low-income families, people with disabilities, and seniors to afford housing. To qualify, you must be eligible for a housing voucher and will then be placed on a waiting list.[9]
Similar to a credit lender, landlords use your credit report to assess your ability to pay the terms you’ve agreed to. They tend to look at these risk factors on your credit report:
One of the best ways to understand what a potential landlord sees in your credit report is to check your credit report. By law, you can check your credit report once a year for free with each of the major credit bureaus by requesting copies online through AnnualCreditReport.com. However, due to the COVID pandemic, you can still receive a free weekly credit report from each of the three major credit reporting bureaus (Experian, Equifax, and TransUnion) until the end of 2023. Experian also allows free credit scores.[12]
Landlords look at more than just your credit score when deciding whether you’ll be a good tenant. Some other factors they take into account include:
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If you have bad or no credit and want to improve your credit score, you can start today. Try credit building tools to help you at any stage of your credit building journey and get your back on track.
Ana Gonzalez-Ribeiro, MBA, AFC® is an Accredited Financial Advisor® and bilingual personal finance author and educator dedicated to helping people in need of financial literacy and guidance. Her informative articles have been published in various news outlets and websites including Huffington Post, Fidelity, Fox Business News, MSN and Yahoo Finance. She also founded the personal finance and motivational website www.AcetheJourney.com and translated the book Financial Advice for Blue Collar America by Kathryn B. Hauer, CFP, into Spanish. Ana teaches Spanish or English personal finance courses on behalf of the W!SE (Working In Support of Education) program and has led workshops for non-profit organizations in New York.
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Finding an apartment to rent in New York is usually a challenging experience – and
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