Renting A House With Bad Credit
When renting out a house I came across many renters who told me up front that they had bad credit. This does not necessarily disqualify you from renting a house but keep in mind just telling the landlord you have bad credit will not give them enough information to tell you whether this is a problem or not. There are all types of bad credit and depending on the landlord they may rent to one type and not another. This is why rental policies regarding screening are fairly general. Most state that a landlord can deny a rental application for "negative credit information". This gives the landlord broad discretion when considering your bad credit. Here are a few types of bad credit and my personal opinion. This may help you if you can match your situation to one of these types. The more upfront about the type of bad credit you have, the more likely you are to be approved or at least you won't waste your time or the landlords if they can tell you upfront whether that might be a problem.
1: Late payments and collections on unsecured debt. This is when I see 30/60/90 days late on things like credit cards, student loans and things that are not held by property like a vehicle or mortgage. This is fairly common and while it doesn't speak well of you, as a landlord if you have a good rental history I'm not as concerned when I see these. What I do however look at is how much has been written off, how much is outstanding and what are your currently monthly payments. As a landlord I'm concerned with whether anything can interfere with your ability to pay rent. So I'm more looking at whether your wages could be garnished in the future or your car taken away than I am at a record of paying credit cards late. That said, if a past landlord reports you were late with rent, that would be an automatic denial as its shows that no one is getting paid on time.
2: Bankruptcy with old discharged debt. This I actually do like if a good rental history is found. As a landlord I'm not concerned with unpaid debt if that debt is discharged. If I can prove a person has paid rent on time, has a good reference and active employment that can be verified. Credit card debt relieved via a bankruptcy is a bonus to me. Not that I go looking for this but it allow me the freedom to look at the person, and most importantly their past rental history.
3: Late payments with alot of outstanding debt. This is the worst in my opinion. Not only are these candidates late on payments with credit cards, car loans and mortgages. These folks carry debt owed that could seriously interfere with their ability to pay the rent. Many times these renters have multiple jobs and are making it work on a wing and a prayer. Should they lose a job or have wages taken through garnishment then their ability to pay rent is at jeopardy.
To ensure you stand out among the competition try the following tips:
Improve Your Credit - Landlords see all kinds of bad credit. Make your credit as good as it can be, get a free credit report and review it for inaccuracies or things that are easy to pay off or settle. There are so many minor debts and collections that could be paid off with less than $200.
Be ready to apply at the showing. - If you like the house apply on the spot and be prepared to provide photocopies of your drivers licenses.
Leave a deposit. - If you are applying to rent a house, consider offering a deposit to hold the property to show the landlord you mean business. Make sure the deposit is refundable should you be denied but allow the landlord to keep the deposit towards your first months rent if approved.
Be ready to pay the rent + deposit immediately. - Many candidates want to negotiate the deposit. If you have bad credit it's to your advantage to be prepared to pay the full deposit and even the last months rent if you can manage it.