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Real Estate Tips

Can You Rent a Home with Bad Credit?

Posted on Tuesday, December 12, 2017

You have bad credit, but you need a place to live. What happens now? Is it possible to rent a home with bad credit?

Why is Your Credit Score Low?

When you are looking for a place to live, you need to determine what you can do to improve your credit or how to explain your bad credit to landlords. A low credit score could exist because you are young, you do not have a lot of credit in your name yet, or your financial habits have led to a poor credit score.

If you have lived with others for your entire life and you have not had to establish your own credit, doing so before you strike out on your own is really important. Establishing credit can be as easy as starting out with a credit card at your local bank, getting a pre-paid credit card, or getting a department store credit card. As you use these small sources of credit wisely, you build your credit score.

If you are currently renting from someone who is not a relative, you can also connect with Rent Reporters. This organization will track your rental payments for a fee and add them to your credit report. This allows you to improve your credit score by showing your on-time rental payments.

In some cases, partnering with others with better credit scores may help you persuade a landlord to rent to you.

What If You Need a Home Now?

It is important to work on your credit score, but you also need a home. What can you do if you need a place to live right now, but you also have bad credit?

  • Be a standout in the interview. Talk with the landlord and explain your situation, especially if your low credit is due to circumstances beyond your control, such as your age or a life-altering event that affected your credit.
  • Reassure your future landlord that you are an excellent tenant by getting stellar references from past landlords.
  • Show that you have a larger security deposit so that landlords feel some sense of financial security about your application.
  • Offer to prove yourself through a shorter-term rental, until you have shown that you can make those payments on time.
  • Seek out rentals in areas with a lot of vacancies to find landlords who are more interested in renting quickly. In slower markets, landlords may be willing to take the risk of renting to you because of the potential rewards of doing so if you are trustworthy.
  • Turn to your relationships. Are there friends of friends who are looking for a tenant? They will be more likely to be amenable to a discussion than a larger company that may just throw out your application based on your credit score.
  • Rent with someone else who has a better credit score.
  • Work with a guarantor such as a parent who has a better score than you do. This person guarantees that payments will be made.

At Open for Homes, we want you to find the best way to rent a home. If you are struggling to find the right fit for you, take a look at the blog at Open For Homes and see how we can help.