While a good credit profile can increase your chances of getting an apartment, those with bad credit can still find ways to rent a home. Here’s what you need to do.
Most landlords use a credit check to vet potential tenants. by assessing a tenant’s credit history, landlords are able to identify how much of a financial risk you might pose as their tenant.
For those with a less-than-stellar credit history, you might have a tough time qualifying as the ideal candidate for that rental home you love so much.
But while trying to rent a home with a bad credit record can be difficult, it’s certainly not impossible.
With the right steps taken, you can improve your chances of renting a home in no time – here’s what to do:
Check your credit record:
Before you start looking for an apartment, it’s important to find out what your financial history looks like. South Africans are entitled to one free copy of their credit record every year.
By having a look at your credit report, you will be able to ensure that your profile doesn’t contain any inconsistencies or false information. If you are looking at a variety of apartments, consider making copies of your report and handing them in with your application directly.
Remember, too many inquiries on your report can hurt your credit score because it can appear as though you are attempting to get a lot of new credit in a short time frame.
Find a guarantor or co-signer:
If you have a friend or family member who is willing to vouch for your financial credibility, consider asking them to cosign your lease, (provided they have good credit).
A co-signer is someone who signs the lease with you, taking on the legal responsibility to ensure the rent gets paid.
In such an agreement, your co-signer is agreeing to make your monthly rental payments if you fail to do so. This serves as a form of protection for landlords who are wary of letting out their home to someone with a bad credit history.
This is also a good option for renters who have minimal credit history. However, it’s important to remember that you don’t actually want your co-signer to be forced to make payments for you, so it’s imperative that you ensure the monthly rent is an amount you can comfortably afford.
Be honest and show progress:
It’s important to be upfront about your financial situation with your landlord.
By being honest, and providing an explanation for your past financial missteps, your landlord might be willing to overlook your weak credit score.
Sometimes, bad credit isn’t a reflection of bad credit management. Whether you briefly lost your job, suffered from medical problems, or experienced a financial setback that was out of your control – providing your landlord with a truthful explanation is essential.
Your willingness to admit and own up to your bad credit is a point in your favour. It also gives you the opportunity to talk about the steps you’ve taken, and are currently taking, to improve your credit score.
Provide proof of reliability:
Providing additional documentation of your reliability is also beneficial. Whether it’s a proven track record of paying your bills on time or references from recent landlords - this will show your prospective landlord that you’re responsible and committed, even if your credit is less than perfect.
Consider letters of recommendation from your employer, previous landlords or even a past roommate who can vouch for your character. Providing a few worthy references can hold significant weight and can reassure a potential landlord that you’re responsible and won’t cause them any problems.
Point to a solid income:
When applying for an apartment, have your proof of income ready for your landlord to look over.
By being able to show a solid monthly income, you are more likely to convince your landlord that you are no longer a risk.
Offering to have your rent automatically deducted from your bank account can also help swing the landlord’s decision in your favour.
Pay rent in advance and increase your security deposit:
Bad credit makes landlords nervous because it indicates that since you’ve defaulted on past bills, you might default on the rent.
Consider paying the first few months of rent upfront, to your landlord. Although it is not the most ideal option, if you do have the extra cash, doing so can help to set your landlord’s mind at ease and alleviate their concerns.
In addition, offering to pay a larger security deposit than the one required in the lease could also work in your favour in trying to win over your landlord.
Not only does this show your commitment, but it also provides them with extra cash that can cover some of the losses and damages should you skip out on the rent.
Consider getting a roommate:
Another solution worth considering is finding a roommate to co-rent the apartment with you.
It is likely that both of your credit profiles will be checked, however, if your roommate has decent credit, the landlord may still give you both the apartment to rent.
Alternatively, try to move in with a roommate who is in mid-lease and can add you without a credit check.
Not only will you be able to have someone to share the costs of renting with, but by reducing your financial burden, you will be able to pay down your debt and repair your bad credit profile faster.
Offer to take a place on a ‘trial’ lease:
If your landlord is still unsure, consider looking at a short term lease (3 to 6 months) or a month to month option.
This gives the landlord more power and reassurance that at the end of your short term lease, they have the ability to terminate your lease agreement, should they still have any doubts in your ability to keep up with payments.
Choosing this option also gives you the chance to show a good track record of on-time payments and potentially win your landlord over
Start building credit:
Bad credit doesn’t have to stay bad credit.
Even if you do find a rental home with bad credit, it is important to immediately begin working on improving your credit profile for next time.
Making your payments on time, reducing your debt and monitoring your spending habits and credit reports are all effective ways to start building good credit and become an attractive rental candidate for the future.