Credit ratings are key when it comes to renting an apartment, as most lease applications require that you provide a credit score. In fact, according to a report by TransUnion, nearly half of all landlords use credit checks to decide whether or not to lease to a potential tenant.
If you’ve never rented before, or if you have a bad credit score that you’re working on repairing, this can make finding a place to live very difficult.
The Catch-22 of Credit can be hard to break, but luckily there are several ways you can rent an apartment even if you don’t have a good way (yet!) to document a strong history of good financial habits.
Have someone with good credit cosign for you.
For first-time renters in particular, asking a parent, other family member or close friend to cosign for you is a logical first step. The only caveat is you must act responsibly by paying your rent on time and otherwise being a respectful tenant, as your cosigner is liable for the lease terms. If you don’t pay your rent, your cosigner will be responsible for total payments due.
Rent directly from a property owner.
It’s almost a given that large management companies and apartment complexes will require a formal credit check before they’ll allow you to rent an apartment. But property owners have more flexibility and may let you prove that you have the means to pay the rent each month by providing pay stubs, bank statements, or other proof of financial viability. And just like you’re being checked out by an independent landlord, be sure to do your homework, too: rental scams happen all the time. If you the owner says she or he can’t meet you in person, or if the deal seems too good to be true, or you’re being asked to wire money or provide a prepaid debit card for the deposit, you might be walking into a scammer’s trap, so be aware.
Offer to pay more upfront.
While a standard security deposit is normally first and last months’ rent, a landlord might be more inclined to rent to you if you can put three or more months rent down in advance. This tells the person you’re leasing from that you have the ability to pay for the apartment and are responsible, and it minimizes the risk that’s being taken on renting to you. In this case, be sure you get signed paperwork that shows how much you put down on the apartment so you have recourse to get back what you’re owed when you move out.
Sign a short or month-to-month lease.
A landlord may be more willing to take a chance on someone without an established credit history if the commitment is for a trial basis with a month-to-month or otherwise short lease. It’s less risky for the landlord, and it should allows you enough time to prove that you’re a good choice as a tenant. The downside is you may have to pay a bit more, as often a higher monthly rent is the tradeoff in case you don’t work out and the rental agent or landlord has to fill the vacancy sooner than expected. Also, plan on being prompt or even early with your rent payments – after all, this is like a probationary period, and you want to demonstrate responsible fiscal behavior.
Explain your situation – but have proof of your finances and habits.
Credit scores don’t necessarily tell the true story, and you may have very valid reasons for having a bad or no history. Include a letter explaining your circumstances with the rental application, and if you can talk directly to the property manager or owner, even better. Still, don’t think that your charm and personality alone will convince a stranger to rent to you; have reference letters from employers or others who can testify to your character and financial habits, and also have bank statements, check stubs, or other paperwork that proves you can afford the rent. Keep in mind that your monthly income should be about three times the rent amount, as the rule of thumb is that a monthly lease should cost about a third of what you earn on a monthly basis.
While the best way to get approved for an apartment rental is to provide a solid credit history, we all have to start (or get back on track) somewhere. And once you do rent an apartment, keep in mind that you can build your credit by having your rent payments reported to credit bureaus. In the end, having to resort to alternate methods of renting an apartment is harder, more costly, and more time consuming than simply ordering a credit report