Can Bad Credit Keep You From Getting That Apartment?

Say you get a credit card offer in the mail and you apply for it, but you get denied. You try to refinance your car loan, and the application comes back with a red stamp on it. You even try to rent a new apartment, and your security deposit goes up because of your bad credit.

Bad credit can affect a person’s life in many different ways; large, small, obvious, or unexpected.

One of the ways it can affect you is when you apply for an apartment or home rental. Even if a landlord doesn’t directly look at your credit score, the information they find on your credit report could significantly sway their decision.

What credit score do you need to rent an apartment?

In general, landlords run credit reports and background checks for the following issues, among others:

• Delinquent accounts
• Repossessed cars
• Evictions
• Late or missed rent payments

If you have one or more of these marks on your record, it may be difficult to find a landlord willing to rent to you. However, no matter how bad your credit, there are several things you can do to increase your chances of approval.

A landlord might not check your credit score, but they may check your credit.

According to real estate investor and founder of RealEstateInvesting.org, Eric Bowlin, “It is pretty rare that a manager or landlord is looking at someone’s credit score. Instead, they may be looking for overall debt-to-income or currently delinquent accounts.”

So how would they do that? By pulling a copy of your credit report from one of the three major credit bureaus: Experian, TransUnion, and Equifax. A credit report is a document that companies like FICO use when they create your credit score.

Your credit report will contain everything that your landlord would want to know about your finances and everything that you would want to keep a secret.

“Your credit report tells a lot about you," says Shane Lee of RentHop, “like whether you plan things ahead, pay your bills on time, and if you are likely to be a good tenant or not.”

“Just because you have bad credit, doesn’t mean that you won’t be able to rent an apartment," says Lee. And that’s true. But what it can affect is what kinds of apartments you can get and how much you’ll have to pay for them."

“A landlord cares about two things,” says Nathan Miller, founder of Rentec Direct, “that rent is paid in full and on time, and that the property remains in good condition.”

“When a landlord reviews your credit and finds problems, they are going to assume that your inability to pay your current and past debts will also affect your ability to pay rent."

How to get an apartment with bad credit

The more competitive the rental market in your area, the lower your chances of finding a landlord willing to overlook past financial mishaps. Think about it: landlords in trendy areas are typically flooded with applications. If they have a choice between renting to someone with rocky credit and a few evictions, or someone with stellar credit and a flawless rental record, you don’t need to be a rocket scientist to figure out who they will pick.

The lesson is that when your credit is poor, your chances of being approved for an apartment in a desirable neighborhood may be challenging. Instead, consider exploring at less competitive areas.

Check out up-and-coming neighborhoods, or if transportation isn’t an issue, consider moving to the suburbs where apartments may be cheaper.

In short, look for a place where you will be your landlord’s best option instead of their last resort.

With bad credit, your rental options will be more limited.

According to Eric Bowlin, “There are some landlords today which still do not check a tenant's credit, but those are typically private landlords with one or two homes,” adding that, “As more landlords learn that they are allowed to pull credit reports on tenants, this opportunity gets smaller every day.”

Renting from landlords who own a few buildings may be easier than renting from a big rental company for a variety of reasons. Big companies often have issues providing timely maintenance for tenants, and they may have less wiggle room when it comes to renting to people with lower credit scores due to strict policies.

While a landlord who owns one building and lives on site may be willing to overlook bad credit for the right kind of neighbor, larger rental companies may not be open to negotiation.

If you want to give yourself a better chance of acceptance, research who owns the building in which you would like to live. You could save yourself a lot of time, and possibly an application fee, by avoiding large rental companies.

This is why Bowlin says, “If for some reason all the major complexes in the area are rejecting the application due to credit, it would be better to find a small mom-and-pops type operation or a single family rental.”

“The owners for these are far more flexible and rely on personal relationships more than a systemized approach to filling vacancy. So, the tenant may be able to offer a higher deposit or to pay a last month’s rent in order to provide security to the landlord to compensate for the poor credit,” he says.

Bowlin also advises that certain classes of apartments might be unavailable to people with bad credit, low income, or a criminal history.

“For example,” he says, “an A-class may require 3 or 3.5x the rent for income and no criminal record at all while a C-class property may only require 2.5x the rent as income and will accept most crimes as long as they are 5 years or older with some exceptions.”

“So, it’s good for the tenant to ask the requirements before applying so they know what their neighbors will be like and they can also avoid paying the application fee if they don’t qualify.”

Find a co-signer

Moving away from a competitive rental market might be a good option for some people, but it may not work for everyone. If you need to stay within walking, biking, or public transit distance from your office, you may need to find another way to get around the bad credit block. One solution? Find a co-signer.

A co-signer is someone, typically a trusted friend or family member with solid credit, who is willing to vouch for you and take legal responsibility for your rent if you cannot. Landlords love renting to people with co-signers, as it gives them an extra layer of protection from a missed payment.

If you have someone willing to co-sign on a lease for you, make sure you mention it to your prospective landlord.

Remember, your co-signer is essentially tying their good credit to yours. If you want to have a positive relationship with this person going forward, make sure you make all your payments on time so they don’t have to shell out any cash on your behalf.

Consider looking for a roommate, not a landlord

Spend any time trawling Craigslist for apartments, and you’ll likely see a lot of posts like this:

“Roommate needed in 2 bed, 2 bath apartment! All utilities included!”

People who are looking for short or long-term roommates are often working on a short timeline; unless they find someone to move in ASAP, they will be on the hook for paying rent for the entire apartment. Therefore, they may be less inclined to ask potential roommates to submit a credit check, or even to sign a proper lease.

If you have blemishes on your report, finding a situation like this can be a great option; just make sure the landlord is OK with you living there before you hire a moving truck, and take proper precautions to vet your potential roommate to make sure you feel safe.

Depending on your credit history, that sweet pad might be out of reach.

A bad credit score can affect different areas of your life. Moving to a new city is one of them.

Some people stay in the same place their whole lives; they’re born in a house, go to school in town, attend college down the road, and work in the family business.

However, that’s the exception, not the rule. Whether you have a new job or you just want a change of environment, moving to a new city can be a great opportunity; but what if you have bad credit? Can a lack of access to financial services keep you from moving to a new city?

Your credit may hinder you from moving to a new city

Your credit will likely affect your ability to move to a new city, according to nationally recognized credit expert Jeanne Kelly:

“A move can be exciting, but how is your credit? If you have a not-so-good credit report, you could have some issues renting a new place to live. Another thing to think about is: If you are going to rent an automobile for the move, your credit can be checked and you might have an issue renting that van.

"Always be prepared in advance," says Kelly, "because credit reports can have errors and it can bring your credit score down lower than it should be. Besides the new rental, you need utilities. Oftentimes utility companies are also reviewing your credit report for oil, electric, telephone, and more—so credit does become a factor with a new move. Think ahead of time.”

So there you have it; your credit can impact your ability to move to a new city. Not only can it prevent you from renting a moving truck or a new apartment, but it can also make your move a lot more expensive.

Certainly, that is something you want to avoid, so we spoke to several experts about how to reduce the cost of relocating.

You’re likely to feel the effects on your security deposit and your utilities.

According to Shane Lee, it’s important for renters with bad credit to, “Have enough cash ready in case the landlord asks for a security deposit,” as those security deposits will likely be larger than they would be otherwise.

Many landlords may be uneasy about renting to you if you have a bad rental history and do not have a co-signer. What is considered a bad rental history? It usually entails multiple missed or late rent payments and/or eviction(s).

If this sounds like your situation, you might need to pay a little more to prove your worth to your future landlord. You have a few options here:

• Offer to pay a bigger security deposit before move-in
• Offer to pay multiple months in rent upfront
• Offer to pay more per month for rent than the apartment is listed for (and show bank records to prove you can afford the higher monthly payment)

Money talks. If you have the funds to do so, paying a little extra can help turn even the most skeptical landlord into a true believer.

“In New York City, for example, a lot of the landlords and property managers will ask for security deposits, and if you have a relatively low or even bad credit score, you might put in up to six months of rent for the security deposit,” she says.

“While it sounds like a lot, most people with bad credit do find it helpful. Remember to go through your lease and make sure that the lease specifies how and when the security deposit should be returned.”

Lee suggests that, in order to get back as much of your security deposit as possible, you do the following:

1. “Throughout your lease, make sure to report damages or appliance malfunctions that aren’t your fault immediately. Be sure to keep records including photos, emails, or letters.”
2. “Inspect the unit carefully and take pictures of damages prior to moving into the apartment. The results of your inspection, if anything, should be reported immediately to your landlord and you should get a written agreement from the landlord ensuring that you won’t be held liable. This way, the landlords have no reasons to withhold your security deposit.”

Nathan Miller also has a suggestion for recouping your security deposit ahead of schedule:

“When you are negotiating your rent and if a deposit is required, ask the landlord if they will consider doing a refundable deposit after six or twelve months of on-time payments. That way you get those funds back provided you pay your rent on time each month.”

When it comes to utilities, Miller says “Most utility companies will require a deposit if you have poor credit. A deposit can be as little as one month worth of service, or as much as one year of service in extreme cases.”

He also says that “in extreme climate areas this can be as much as $2,500, but that is pretty uncommon.”

“In terms of utilities,” says Shane Lee, “a landlord should not refuse to provide all the basic utilities based on the tenant’s credit score. As long as you can prove that you can afford the rent, your credit shouldn’t have an impact on utilities included in the apartment.”

“Of course, it might be hard to have the landlord provide electricity, wifi, etc., as bad credit does make a difference when it comes to a person’s reliability,” she says.

But even if you have bad credit, you still have rights.

Having bad credit might mean that you have fewer options as a prospective tenant, but it doesn’t give landlords the right to treat you poorly.

According to Nathan Miller, “A landlord is required by law to have a uniform set of standards for accepting an applicant. If their rules do not include reviewing credit, then they cannot review your credit either. Additionally,” he says, “if you are denied acceptance based on your credit, you can request a copy of the report they used to deny you.”

“Once you sign the lease,” says Shane Lee, “the landlord is responsible for everything that’s covered in the lease and certain rights as a tenant.” Those rights include:

1. Right to livable premises
2. Right to complain and organize
3. Right to possession, privacy
4. Right to receive services
5. Right to fair, equal treatment
6. Right to transfer rights, obligations

“Your credit should not have any impact on the rights you enjoy as a tenant!” says Lee, a sentiment with which we agree.

If the marks on your credit report were the result of life situations beyond your control, you have a right to make that known. There is no harm in sending a detailed letter with your rental application to explain in advance what your landlord is likely to find when they run your credit.

Use the letter to detail what happened, why it is unlikely to happen again, and include a few trusted references your landlord can call to corroborate your story and your current financial standing and responsibility.
Dispute discrepancies in your report

The FTC estimates that one in five credit reports include at least one error that could negatively impact a person’s credit. We’ve written before about why it’s so important to review your report as often as possible; errors in your report are a major reason why.

If it has been a while since you checked your report, visit AnnualCreditReport.com to request a free copy from each of the three major U.S. credit bureaus: TransUnion, Equifax, and Experian. You’re entitled to one free download of each report every year, so you can either grab them all at once or spread them out every four months to get an update three times a year.

If you see anything suspicious on your credit report, like mystery credit cards or cash advances, evictions you didn’t experience, or even delinquent utility accounts you never opened, send a dispute letter to the credit bureaus. You can read the sample letter from the FTC.

According to the FTC, this letter should:

• “Ask the credit bureau to remove or correct the inaccurate or incomplete information.
• Include:
  • Copies (NOT originals) of documents that support your request.
  • Your complete name and address
  • Each mistake that you want fixed, and why
  • A copy of your report (circle the mistakes you want fixed)
• Send your letter by certified mail and pay for a “return receipt” so you have a record the credit bureau got it.
• Keep copies of everything you sent.”

Credit bureaus will typically investigate your dispute and resolve it within 30 days.

Choose your new location carefully

“If you're moving to a new city and you don't know it well, you should rent,” advised Ali Wenzke, who writes at The Art of Happy Moving. “Get to know the city and the neighborhoods before you make the biggest financial investment of your life. When you rent instead of buy, this gives you flexibility with your job and the city if things don't work out (saving you tons of money in the long term). It also puts you in a stronger negotiating position if and when you do decide to buy.”

Wenzke also outlined some other things to look for when picking your location:

“Commuting costs add up. Whether you are spending money on gas, bus fare, or the commuter train, calculate what the daily cost will be to you. While downtown rents may be more expensive, it may be less of a price difference than you think when you take parking or daily travel costs into consideration. Before you move, type your potential new address into Walk Score. Do you have easy access to grocery stores, restaurants, and entertainment? Save money on that Uber and find fun things to do within walking distance of your new place. It's good for your wallet, health, and happiness.”

Consider a "hybrid move" to save on professional help

So you found the perfect place, or as close to perfect within your budget, now it’s time to get yourself and all of your stuff to the new place. What’s the best way to go about that process without spending too much money?

"The best cost-cutting effort someone can make starts by choosing the right moving method,” Mike Glanz, CEO of HireAHelper, told us. “People have more choices today than they may think. Instead of hiring an expensive full-service moving company, or breaking your back by doing it yourself, look at all of your moving options. For example, take the ‘hybrid moving’ concept that is gaining momentum nationally because it's dramatically reducing the cost of moving.

“With a hybrid move, you simply hire local, hourly moving laborers to load and unload a rented truck or portable moving container. You can find hourly laborers (fully licensed and insured) anywhere in the country using online services such as HireAHelper. Then drive your own truck or manage the delivery of your container. It's called a ‘hybrid move’ because it's part DIY and part full-service.

“By decoupling the transportation and labor, this approach is hundreds of dollars cheaper than hiring a full service moving company—and it mitigates the most popular scam employed by rogue moving companies: holding your goods hostage for more money (some moving companies will hold your goods in their truck until you pay an above-quoted price. It happens all the time.)"

How to continue saving money after your move

Once you've moved into a new place, there's still more work to be done. And the same is true with saving money. Just because the move is over, doesn't mean the savings have to stop!

“Try and get a tax break,” advised Keller. “In the event that you are relocating for a job, there is a possibility that you will be able to deduct some of the expenses from your taxes. These expenses can include storage, transportation, and even the cost of hotel stays or other lodging options incurred in between staying in your old house and your new one. Just make sure you don’t throw away your receipts!”

Finally, Wenzke offered a tip that could be helpful even if you’re not moving: “My first stop in a new city is the library. You can borrow books, movies, and get access to online materials. Your public library may also have free resident passes to local attractions and there's often some sort of free event happening.”

A commitment to minimizing the costs of your move should leave you in a better financial position in the future.

If you are considering borrowing money for any other purpose, and you have unanswered questions, read the OppU Guide to Bad Credit Loans.

Eric Bowlin is a real estate investor and founder of RealEstateInvesting.org, a website about achieving financial independence through real estate investing. He started investing in 2009 and was able to achieve his dream of financial independence in 2016 at the age of 30.

Shane Lee (@RentHop) is a Data Scientist at RentHop, a national apartment rental site based in NYC, and regularly spends time speaking with renters, landlords, and real estate brokers to keep up with the ever-changing tide of the US rental markets. Her efforts have helped RentHop expand into new markets and better serve renters looking to find their new home.

Nathan Miller (@rentec) founded Rentec Direct in 2009 which is a cloud based software company that services the landlord and property management industry. Today they work with landlords and property managers in the US by providing automation software, tenant screening, online rent payments, and education to effectively and efficiently manage their rentals.

Mike Glanz is the Founder & CEO of HireAHelper (@hireahelper), a moving labor marketplace that debuted in 2007. Having worked in the moving industry for a number of years, Mike launched HireAHelper to provide consumers with a new way to move called Hybrid™ Moving - a cross between the affordability of moving yourself and the ease of paying movers to do it for you.

Jeanne Kelly is an author, speaker, and coach who educates people to achieve a higher credit score and understand credit reporting. #HealthyCredit is her motto. As the founder of The Kelly Group in 2000 and the author of The 90-Day Credit Challenge, Jeanne Kelly is a nationally recognized authority on credit consulting and credit score improvement.

Ali Wenzke, a Moving Expert, moved 10 times in 11 years. Now she’s helping the millions of people who move each year by providing practical tips on how to make moving a happy experience at The Art of Happy Moving. After calling seven U.S. states home, Ali is now happily settled in the Chicago suburbs with her husband and three children. She doesn’t plan on moving anytime soon.