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Can you rent an apartment with bad credit?

minute read

    A good credit score is essential for many of life's moments, including finding your own place to live. It's important to have a good credit score because it shows landlords that you are reliable, low risk and more likely to make your payments in full and on time. When you enroll in Chase Credit Journey®, you can view your free credit score and understand how it can impact your chances of getting approved, whether that's for an apartment or a home.

    A good VantageScore® is 661–780 and a good FICO® score ranges from 670–739. When you start to get below these numbers, you might face some resistance or obstacles in getting approved for a lease. For example, a poor FICO score is considered to be 300–579 and a poor VantageScore is 300–660. This doesn't mean that renting an apartment with bad credit is impossible—but you may have to take some extra steps to increase your chances of being approved.

    In this article, we will learn:

    • What landlords look for on a credit report
    • How you might be able to increase your chances of being approved
    • How to improve your credit score before applying for a lease

    What do landlords look for on a credit report?

    Landlords are not required by law to run a credit check on a potential tenant, but they may do this to ensure that you are reliable/responsible with your money and that you make your payments on time. When a landlord runs a credit check (otherwise known as an inquiry), they receive a credit report from the 3 main credit bureaus—Experian™, Equifax® and TransUnion®. Keep in mind that this kind of credit check is considered a hard inquiry, meaning it could hurt your credit score by a few points. According to Experian, landlords look for the following items your credit report:

    • Overall debt—including debt towards credit card balances, loans and minimum monthly payments
    • Late bill payments
    • Past-due accounts
    • Defaults, meaning you've stopped making payments towards a loan
    • Collections
    • Bankruptcies

    While this information is helpful to landlords when determining your approval status, there are other factors that they can take into consideration. When you have a lower credit score, you may be able to leverage your skills as a negotiator and supporting documentation as a way of helping you get approved for a lease. Let's explore some of these other options below.

    How to increase your chances of being approved for a lease

    Renting with bad credit may be more difficult, but not impossible. With some personal initiative and negotiation, there's a few steps you can take. Let's explore these steps below.

    Step 1: Pay an extra month's worth of rent

    Offer to pay a full month's rent upfront to assure the landlord already has the money in hand. This could help the landlord feel more secure and confident that you're able to provide money towards future rent, or give them security in case you can't meet the next month's rent. However, this step can be expensive. Remember that landlords may also request a security deposit, application fee, and a first month/last month deposit, all of which can further increase the total you are paying upfront.

    Step 2: Look into a co-signer

    A co-signer is someone who is added to the lease as a responsible person who will pay the rent if you are unable to. This is someone you trust, such as a friend or family member who has the available funds to be able to financially support you in the event that you can't make rent. Co-signers are also used in the context of taking out loans, such as auto loans.

    Adding a co-signer helps assure the landlord that you'll have backup in case you can't make the payments. This could be a wise step to take if you're looking to rent with bad credit, or if your monthly/annual income just barely covers the cost of living. Adding a co-signer will not hurt your credit score but will impact the credit score of the person who is cosigning for you.

    Step 3: Provide supporting documentation

    While your credit score is an important factor when it comes to getting approved to rent an apartment, there are other factors a landlord may consider. This includes additional financial information, such as pay stubs, proof of employment, your estimated salary, previously paid utility bills and letters of recommendation. Even if you have a poor credit score, supplying these documents can potentially have a huge impact on your landlord's decision.

    Step 4: Improve your credit score

    Oftentimes, the best way to avoid the potential impact of a poor credit score is to improve your current score. This won't happen overnight. However, if you aren't in a rush to rent an apartment and have some extra time at your disposal, consider the following actions to improve your creditworthiness and boost your credit score:

    • Lowering your credit utilization ratio by paying off credit card balances
    • Making regular, timely payments, as payment history is a huge contributor to your score
    • Disputing any errors on your credit report, such as an unauthorized credit card charge
    • Enrolling in Chase Credit Journey to monitor and keep track of any changes to your score as well as use its free resources to learn more about credit

    Unlock opportunities with a good credit score

    As you can see, having a good credit score can help make the process of renting an apartment smoother. When you have a good credit score, you'll have more opportunities to take steps towards life's biggest milestones. From renting your first apartment to buying your first home, good credit is something that will remain important to you as you grow.

    When you enroll in Chase Credit Journey, you'll access to your Experian credit report and a free credit score to help you monitor your credit, as well as access to free resources and tools that empower you to make smarter financial decisions at any stage of life.

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