Here's How to Get an Apartment With Bad Credit

April 9th 2017

Unfortunately for many of us, credit scores are important.

Companies look at your credit report when determining whether you can finance a car, get a loan for a house, or take out credit cards.

However, did you know that your credit score can also determine whether you can rent an apartment?

Last year, credit report company Experian said that nearly one third of Americans have bad credit, and in 2015, a study by the Consumer Financial Protection Bureau found that 45 million Americans have no credit report at all, or their reports are too outdated or limited to be usable.

Although not all landlords will look at credit scores, they may check a credit report to indicate whether a tenant will pay their rent on time. If you have bad credit or no credit at all, that could be a big problem, especially in a competitive rental market.

There are things you can do to offset a bad credit report with a landlord.

First, you need to know your credit score, and then you need to find out if it's considered great, good, or bad. The criteria for a bad credit score is not set in stone, and the ranges can vary depending on the lender. However, the most widely used type of scores are FICO scores by Fair Isaac Corporation, and the company offers some general guidelines. A score between 669 and 580 is considered fair and a score lower than 580 is considered poor, as you can see from the company's chart below.

A chart of FICO scores. Fair Isaac Corporation - myfico.com

If you've determined that your credit score needs some help, it's time to develop a plan to win over the landlord and lock down a move-in date at a new place.

A living room in a new apartment. Danielle DeCourcey

Here are three ways to get an apartment with a bad credit score:

1. Get a roommate or a co-signer with good credit and a steady income.

A roommate with really good credit can counteract your bad credit, and it may be possible to keep your name off the lease. Also if you know someone who is mid-lease with an empty room, they could potentially add you to the apartment without the landlord requiring a credit check. Another option may not be possible for everyone, but if you have someone in your life willing to take the risk with good credit, they could co-sign the apartment lease with you, just as a co-signer on a loan would do.

"A co-signer is a person who is obligated to pay back the loan just as you, the borrower, are obligated to pay," says the Consumer Financial Protection Bureau. "A co-signer could be your spouse, a parent, or a friend."

A co-signor who doesn't live wth you, will also appear on the lease, and they will be legally responsible for the rent if you don't pay it, giving landlords some additional assurances that they'll get their money.

2. Put down a large deposit or pay in advance.

handful-of-cashStocksy/Carolyn Lagattuta - stocksy.com

If you have some savings, you could negotiate with the landlord by offering some money up front, and that could inspire more confidence in your ability to pay in the future.

"Bad credit makes landlords nervous because it indicates that since you defaulted on past bills, you might default on the rent," wrote Paula Pant on Trulia's blog, a real estate website. "By paying a month or more in advance or offering a two-month security deposit, you can alleviate their concerns."

3. Offer copies of your pay stubs and strong referrals.

If your credit score is bad because of a specific life event or a financial situation from your past, an explanation with pay stubs and good referrals can show that you're capable of paying the rent now.

"Even if your credit history is a little shaky, being able to show a history of regular, consistent income can go a long way toward making a landlord feel better about you," Pant wrote. "When applying for an apartment, have proof of income ready, such as recent pay stubs, tax returns, and even a letter from your employer verifying your employment status and income."

Referrals from bosses can show that you're responsible and confirm that you will continue to have steady employment, and a strong referral from the previous landlord can reinforce that you will pay your rent on time, according to Realtor.com blogger Angela Colley.

"Tenants who have a habit of late payments are the bane of all landlords," wrote Colley. "If you have a solid history of paying your rent on time, you’ll be incredibly appealing to any landlord."

RELATED: Why Young People Are Slowly Breaking Up with Credit Cards

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