Today my credit score is pretty good, but it wasn't always that way. Not so long ago my credit score fell in the subprime range and I had trouble qualifying for basic things like credit cards, auto loans, and even apartment rentals. Unfortunately, while I could put off taking out a loan until my credit score improved, I had to find somewhere to live. So I learned how to rent with less than perfect credit. If you're in the same boat, here is what you can expect.
Upfront Rent Payments
One of the first places I rented on my own was a very small one bedroom house owned by a private landlord. I met the landlord's income qualifications and passed the background check, but he was looking for a higher credit score. So I offered to pay both my first and last month's rent upfront. Knowing he had an extra month of rent tucked away was all the landlord needed to approve me.
One of the most common special requirements I came across with landlords was a higher deposit, especially in large apartment complexes that were run by companies and not private landlords. For example, once while apartment hunting I found two apartments I liked, both in large complexes. The first property management company wanted double the security deposit - the equivalent of two month's rent. The second property management company generally only asked for a $400 deposit, or half a month's rent. However, since my credit wasn't great, they asked for a full month's rent.
Having to pay a higher security deposit upfront is difficult, but the money is fully refundable as long as you stay throughout the lease, pay the rent on time, and don't damage the apartment while you're living there.
Many landlords I talked to suggested that I get a co-signer to sign the lease with me. Basically, a co-signer can be anyone you know with a good credit rating and a solid source of income. You both sign the lease, but the cosigner doesn't receive a set of keys or live in the apartment. Many landlords will allow you to use a co-signer instead of paying higher upfront fees, but it was never an option I used. If you default on the lease, the landlord can ask the co-signer to pay for any rent you owe or the cost to repair damages. While I didn't see that being a problem in my case, I didn't want to risk my relationship with someone else.
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More From This Contributor:
- Real Estate
- credit score
- credit cards