How To Rent a House With Bad Credit: Guide for Renters

There are a lot of misconceptions when it comes to credit scores. Renters often have to look at a single number and try to make sense of it, along with trying to understand whether they will find housing based on it. The good news is that renting with not great or even bad credit is possible and there are strategies to help make it happen. We will go over renting a house with bad credit and a number of the questions people have when going down that path.

Our Atlanta property management services involve the process of rental applications with credit and background checks. So it is something we address often. While it is a valid concern for renters, it is something that can be dealt with head on. So let us dive in.

Here are some things we will explore:

• What Does Your “Credit Score” Mean? – First, let us make sure we know what a credit score is.
• How Does Bad Credit Affect Apartment Rentals? – We will examine the role of credit scores when renting.
• 5 Strategies to Rent Even with a Bad Credit – We will address what your options are if you do have bad credit.
• FAQs – And finally, we will go over some common questions and misconceptions in regards to credit scores.

What Does Your “Credit Score” Mean?

When thinking about renting a house or apartment, looking up your credit score is a common early step. One thing that is important is to make sure you know what exactly you’re doing when you look up a credit score.

Before diving in, let’s clarify what a credit score is. It’s a three-digit number that indicates your “creditworthiness,” typically ranging from 300 to 850. Higher scores can make it easier to get approved for loans and credit cards with favorable interest rates and terms. On the other hand, lower scores might be a problem in regards to your ability to obtain credit and could lead to rejections for certain applications, including rental properties.

These credit scores are used by lenders and landlords to try to determine how likely you are to fulfill the financial obligations you have. That can mean renting a house or apartment.

How Does Bad Credit Affect Apartment Rentals?

If you plan on apartment hunting and are unsure of where your credit stands, take the time to look up your rating. Is it actually something to be worried about? Check it to be sure. A bad credit score is often considered anything below 670, but you can read our FAQ below, which goes into more detail on the numbers. If your score is considered poor or very poor, you may find it difficult to compete with renters who have higher credit scores. Although that may be the case, it isn’t an impossible situation.

How can you check your credit score? Great question! It’s simpler than you might think. You can access your score for free through services offered by your bank, credit card company, or other providers. If possible, for a more comprehensive view, try to get your credit score from all three major credit bureaus. Those are Experian, Equifax, and Transunion.

5 Strategies to Rent Even with Bad Credit

What do you do if you find that your credit score is lower than you would like it to be? If you find that you have bad credit, all hope is not lost. There are a number of strategies you can try to rent the house that you are vying for. We will go over a few of the top strategies here.

1. Prove Your Income and Savings – If you have a low credit score, you could prepare other ways to show your ability to pay. Ultimately that is what landlords want to be able to tell from a credit score. You can do this by either showing a high income or a high savings amount relative to the monthly rental payment. Or, even better, you could show both. Some options for doing this could be showing pay stubs for the last few months, or even the last year. Or you could show that you have at least 3 months of rent payments in a savings account.
2. Present a Letter of Explanation – Some potential renters opt for writing a letter that explains their situation and certain aspects of their credit report. For many, it’s a straightforward option that is very reasonable. Being honest and upfront about your credit history can make a difference. You can also describe what you are doing to address issues with your credit. But it is usually best to discuss it with your potential landlord before submitting your application with a letter. There are a number of templates of letters online you could use as a starting point.
3. Get References from Past Landlords – Along with a letter of explanation, you could also acquire and put forth references from past landlords that provide evidence that you are a good tenant. Similar to the letter, it is best to talk with your potential landlord before submitting these types of accompanying documents.
4. Offer to Pay More Upfront – If you have the money to pay more upfront, you could offer to pay more than what is being asked. Certainly not all landlords will allow or consider this, but it’s worth checking about. For example, you could offer to pay three months rent upfront rather than one month plus deposit that they are asking for. Or you can offer to provide a larger security deposit. Before you do this, always check state and local laws to ensure this practice is allowed.
5. Get a Co-tenant or Co-signer – Here is another option. Maybe get a roommate as a co-tenant. This could significantly change the situation but would allow someone with additional income and a different (preferably better) credit history to be added to the lease. Another option would be adding a co-signer (or guarantor), which is someone who agrees to take financial responsibility if you fail to pay rent. A co-signer needs to go through many of the same credit checks and income verifications that the renter went through.

FAQs

Now that we’ve gone over many of the options you have if you do find yourself renting a house with bad credit, now we can address some of the questions you may still have.

What is considered bad credit?

The most common consumer credit scores are VantageScore® and FICO®. For VantageScore, a poor score is 500-599 and very poor score is 300-499. For FICO, a poor score is 300-579.

What is the lowest credit score you can have to rent an apartment or house?

This of course can vary. But, a credit score of 620 or above is a good goal for anyone aiming to rent a house or apartment.

Which credit bureau is most important when renting an apartment or house?

Most landlords expect credit reports from one or multiple of the three major credit bureaus: TransUnion, Experian, or Equifax. Any of these are considered fine, though from one property management company to another they may have a slight preference.

Choose a Trusted Property Management Company

Still looking for help? Now that you have learned a fair bit about renting a house, it would be wise to think about calling a property management company. You would be surprised how much they can help you through the process. Knowing who to contact is important in addressing the issue and navigating the rental journey.

If you’re looking to rent from a trusted property manager in Atlanta, look no further than BMG. Bay Property Management Group has an extensive team of professionals who can help you move into your next rental home. Give us a call or visit us online today!