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How to Rent a House with a Low Credit Score

Lifestyle News

It’s difficult and scary enough to find house for rent due to the soaring rent prices, concerns regarding a neighborhood, and other considerations. However, when you add to the stress of worrying about whether your credit score will weigh into the options available to you, it can become downright terrifying.

Here’s a simple breakdown of why and how your credit score affects you as you find houses for rent: Your credit score is your creditworthiness. Lenders and landlords will want your score to be beyond a certain level for you to be a reliable borrower. This score depends on your credit history – any unsettled debts, unpaid bills, open accounts, and more make your score bad. Lenders evaluate this score to decide how likely a borrower is to be able to return the borrowed amount.

However, it’s important not to take a bad credit score as a personal failure. Many people will face circumstances and financial setbacks that make for a bad credit score at some point in their lives. It’s not accurate for those times to be held as a yardstick against which one is measured when considering rental applications. But, of course, it’s important to know how to work around such a situation.

When you’re looking to rent a house, it’s important to know that landlords will look for applicants with good credit scores because it’s often considered a way of gauging how responsible a potential tenant can be. Because of this, credit scores can often be a deterrent when you’re trying to rent a house and cause you to settle for bad locations. Simply put, landlords consider credit scores a way of determining if you’ll be able to pay rent on time and are taken as a reflection of how well you manage your money.

 How is a Credit Score Calculated?

Credit scores are determined based on five factors:

  • Credit history – 15%
  • Credit mix – 10%
  • Payment history – 35%
  • Amounts owed – 30%
  • New credit – 10%

However, this calculation is always shifting because the scores are always adjusting.

What is Considered a Low Credit Score?

Credit scores go from 300 to 850, and while there is some debate on the point beyond which credit house scores are considered acceptable – a score below 650 is taken as unacceptable, while 700 and above is thought of as reliable and good.

Now that the basics have been covered, here are some ways you can get around a bad credit score and get the rental unit of your dreams.

1. Get Someone Who Can Co-Sign

The main issue with a low credit score is that landlords will be unsure of your ability to produce rent on time, so one of the most effective ways of convincing them otherwise is to get someone to financially back you up by co-signing. Simply put, this means that someone else will be responsible if you cannot pay the rent on time. People will often opt for close friends or family members to take on this role, and as is obvious, said person needs to have a good credit score themselves.

2. Make a Specific Offer

Unfortunately, much of renting a house is about making a larger bid than your other contenders, so one way to get around a low credit score is to make an offer that holds extra money. Although most landlords are clear about the price they ask for, very few will object to a larger offer. This might give you an edge over the others.

3. A High-Security Deposit

Another way of proving your reliability is by offering a higher security deposit. This is a very effective technique that will increase your application’s appeal. Some properties may sometimes have strict rules regarding this, but it’s quite rare.

4. A Positive Recommendation

One way to get your landlord to focus beyond the numbers is to procure a glowing reference from a previous landlord who can vouch for your financial stability. If you have a previous history of being a tenant and paying rent on time, then take advantage of it. Positive feedback from someone in a similar status as your future landlord will always be an additional point in your favor.

5. Suggest an Automatic Deduction

From a landlord’s perspective, the primary cause of worry is wanting their payment in full and not a day late, so to alleviate these concerns, you can allow for an automatic deduction from your bank account. This will increase your trustworthiness and make your application more likely to get approved.

6. Be Honest

As discussed earlier, most people know that low credit scores are not the most accurate reflection of someone’s reliability or sense of responsibility. So, avoid leaving the conversation for the last minute and be upfront about whatever situations led to your score. Everyone faces financial stepbacks, so admitting it from the beginning and offering a reasonable explanation for the same can go a long way in proving your willingness to improve.

7. Solid Income History

There are other things that a landlord looks at apart from your credit score. If you have a low credit score, you can balance that lack by demonstrating a solid income history by providing letters of recommendation from your employer, tax return documents, and more.

Conclusion

Low credit scores can seem daunting when trying to get your dream rental unit, especially considering the tough competition one seems to have for every possible location, but there are ways to get around it. It’s unfair, especially for new homeowners or youngsters who are, perhaps, just starting their careers, to be expected to handle money management from the word go, and having a bad credit score shouldn’t stand in the way of getting the home of your dreams. Just focus on working around it and try to rebuild your credit score while you’re at it to make sure you can avoid such problems in the future.

More Read On: Spero Magazine

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