How to find housing with bad credit

Don’t let bad credit keep you from finding a new home.

It’s hard enough to find accommodation that stays within your budget and where you can see yourself staying for the long term. But when you have bad credit, this home search becomes even more difficult.

Some homeowners won’t even consider your request if you don’t have enough credit. Even if they think about it, if someone with better credit applies for the same home as you, the landlord is almost certain to choose them.

It is a frustrating situation, but it is not hopeless. Here are the best strategies you can use to find housing when you have bad credit.

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Rent from an individual owner

Some rentals will have much stricter tenant requirements than others. For example, if a property management company is in charge of a rental, you can safely assume that bad credit will be a deciding factor. These businesses typically do not deviate from their minimum income and credit score requirements for potential tenants.

You might have better luck with an individual owner. This is when the rental owner also handles management tasks, including tenant applications. Individual owners may be more willing to work with you despite your bad credit.

Save and pay more in advance

In some cases, you can convince a landlord to take a chance on you by paying rent several months in advance. It depends on both the landlord and part of the country, as some states have regulations regarding the ability for tenants to pay rent in advance.

While paying more rent up front isn’t an option, a large savings balance can still help secure a spot. Homeowners usually charge applicants with bad credit a higher security deposit, so having the savings to pay this will help if you are approved. And being able to check your bank account balances could alleviate a homeowner’s worries about your financial situation.

Rent a room or sublet

One way to potentially avoid a credit check is to rent to a tenant who already has an existing lease. Room rentals and sublets are both good options that you can look for on rental listing sites. Since the tenant is trying to find a tenant in these situations, they will screen and likely not do a credit check.

There are precautions to take if you take this route:

  • Obtain a rental agreement so that you have proof that you pay the rent and that you live there.
  • Check that the owner or property management company is okay with you residing there. If the tenant is planning to sneak up on you, you’d better find another place.

It’s also important that you carefully assess any potential roommate because trust me, the wrong roommate can make your life miserable. I have had very good roommates in the past. I also had one who got mad at me when he couldn’t find his Star Wars figure.

Provide proof of your income

The biggest concern of a landlord is that you pay the rent on time. Bad credit is a strike against you, but they may still be willing to hire you if you make enough money and can provide proof of income.

How much money is enough? A standard rule used by many landlords is that the gross monthly income should be at least three times the rent. If you do more, it’s even better.

Get a reference letter from a previous owner

There are all kinds of reasons your credit score may drop, and a lot of them don’t relate to whether you are a trustworthy and reliable tenant. By showing a potential landlord that you’ve been a model tenant in the past, you may be able to convince them to approve your application.

If you’ve rented a house before and left in good condition, ask the landlord for a letter of recommendation.

Find a co-signer

Do you know someone with good credit who is willing to co-sign the rental application? This could help you get approval, as the landlord will perform a credit check on your co-signer and base their decision on that co-signer’s credit rating.

Not all owners accept co-signers, so you’ll need to find one that will. It can also be difficult to find a co-signer as they will be responsible if you damage the apartment, fail to pay rent, or get evicted. But this method can qualify you for a home that you couldn’t get on your own.

A temporary solution

All of the strategies listed above are temporary solutions to meet your most pressing need: finding a new place to live. Once you’ve dealt with this, your next step should be to build your credit so you don’t find yourself in this situation.

To do this, make sure you pay your bills on the due date and don’t leave any balances on your credit card get too high. By following good credit habits and keeping an eye on your score, it will ultimately be high enough that you can easily qualify for any home.

About Sally Dominguez

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