Bad credit can be a hindrance to many things, including finding a place to live. It’s not uncommon to feel overwhelmed and discouraged when searching for an apartment to rent with a low credit score. Many landlords and property managers use credit scores as a way to gauge an applicant's financial stability and reliability.
However, having imperfect or even no credit history doesn’t mean that you can't find a suitable apartment to rent.
Finding an apartment with bad credit may be easier than you think. It starts with being honest with the landlord about your financial situation. The more upfront you are, the more willing a potential landlord will be to have you as their tenant. You can also offer a higher first and last month deposit or find a co-signer with great credit to give more peace of mind to the landlord that your rent will be paid in full and in a timely manner.
In this post, iCASH, a Canadian provider of online personal loans, shows you how to successfully secure a rental and avoid any hassles in the process.
How Bad Credit Affects Apartment Renting
Knowing and checking your credit score is important because most landlords rely on this rating to decide whether or not you’re financially capable of renting from them. They can use your credit score to determine your likelihood of paying your rent on time or to see how you’ve managed your finances in the past.
With a lower score, you could be perceived as a higher risk for landlords, who may ask for a co-signer or an additional security deposit. In some extreme cases, a landlord may even reject your rental application altogether. This is why you should know how your lending history can affect your chances of renting an apartment in Canada before starting the process.
Common Reasons for A Bad Credit Score
Having “bad credit” is not just an expression, but rather a real problem that can affect many transactions in your life - and finding a place to rent is definitely of them. It's Important to understand how bad credit can affect you and why you should start taking action to improve it.
Here are some of the most common things that negatively impact credit scores:
- Late or missed payments, including late rental payments.
- Collections and charge offs: Outstanding debts that you forgot to pay could end up in collections or charged off.
- High credit card utilization: A high credit utilization ratio - the amount of credit you use versus your available credit limit - could signal that you are not financially responsible.
- You’re a victim of identity theft: If someone steals your personal information, that person could open up credit cards or take out loans in your name. As a result, you could end up with charges and late payments on your credit report that you never even knew about.
How to Find a Place to Rent With Bad Credit
Having less-than-perfect borrowing history can make renting an apartment more challenging, although it’s not impossible. There are ways you can successfully find a rental property even if your finances are not fully in check.
Below, we’ve outlined some strategies you can use to find landlords or property managers who are willing to rent to tenants with bad credit:
1. Be Honest with the Landlord
Honesty is the best policy - and that includes when you’re looking for an apartment to rent. Be upfront with the landlord about your financial situation and explain why you have a poor credit score. Landlords appreciate honesty, and it may help you build trust with them.
2. Offer a Higher Deposit
One way to convince landlords to rent to you with bad credit is by offering a higher deposit. By offering a higher deposit, you not only show the landlord that you are committed to paying your rent on time, but that you are also capable of affording their rental. The higher deposit can also give the landlord a sense of security, knowing that they have a buffer in case of an emergency.
3. Get a Co-Signer
Another way to rent an apartment with bad credit is by getting a co-signer to help you. A co-signer is someone who agrees to be responsible for your rent if you are unable to pay it. This can be a family member or friend with a good credit score who trusts you to make your payments on time. However, if you fail to pay your rent, your co-signer will be legally responsible for paying it.
4. Find a Roommate with Better Credit
If you are struggling to rent an apartment on your own, consider finding a roommate with a great credit score. By finding a roommate with good credit, you can convince landlords that you and your roommate are financially responsible and able to pay the rent on time. This can also help you split the cost of rent and other expenses, making it more affordable for both of you.
5. Find a Short Term Rental or Sublet
If you’re having a difficult time finding a rental property because of your poor financial history, you can try looking for a short term rental. A landlord may be more willing to lease out a short term rental to someone with bad credit than securing something long term.
You could also look for existing tenants who are looking to sublease either their entire apartment or a room in the existing apartment. Although you will both need the landlord’s consent, subletting an apartment or a room in an apartment can be a great alternative if you do not have stellar credit and are looking to finalize a rental property quickly.
6. Look for Private Landlords that Don’t Check Credit
You can also look for private landlords that don’t perform credit checks. While this option may limit your choices, it can be an excellent solution if you are in a rush to find a place to live. You can look for places through online classified ads, like Kijiji or Craigslist, Facebook marketplace, or word of mouth.
On Kijiji, for example, you can browse through plenty of rental properties from private owners or smaller leasing companies that are more likely to rent to lower credit tenants. Or you can simply ignore listings that mention a credit check is required because those landlords are more likely to be looking for tenants with established and positive lending history.
7. Look for Low-Income or Subsidized Housing
Finally, if you are still having trouble finding an apartment because of a difficult financial situation, opt for finding a rental property that accepts bad credit. When searching online for an apartment to rent, you can refine your search to look for low-income or subsidized housing. These rental properties are typically accept bad credit and are available at more affordable rates.
Presenting Yourself as a Responsible Tenant
Landlords want to know that you will pay the rent on time and respectfully look after their property. If you have bad credit and want to present yourself as a responsible tenant, you can offer to provide references from previous landlords or employers to vouch for your reliability.
There are also other things you can do to present yourself as a responsible tenant to a potential landlord, including:
- Provide proof of stable employment: This could be in the form of a recent pay stub, employment contract, or a letter from your employer. Showing evidence of stable employment will give landlords more confidence that you can afford to pay the rent each month.
- Provide a list of positive references: Your list of positive references could include, previous landlords, co-workers who can provide a professional reference, or you could even provide receipts of payment history from previous rentals.
- Provide detailed information on your rental application: Make sure to include all details on your rental application, so that your potential landlord can easily verify who you are, see your rental history, employment reliability, and previous rental experiences.
- Highlight your clean lifestyle: Reassure that landlord that you will take care of their property because you are a tidy person. If you are meeting with the landlord, present yourself in a clean and professional manner.
Improving Your Credit Score for Future Rental Opportunities
Whether you’ve secured a rental or are still looking for the right property, you should strive to stay on top of your finances and work to improve your credit score. Doing this will allow you to find a place more easily the next time you look to rent.
By following these tips, you can begin improving your credit for future rental opportunities:
- Pay off any existing debts: Ensure you are managing your debt responsibly - and especially any delinquent accounts.
- Make all payments on time: This includes rent payments, car payments and other loan payments you may have.
- Set up automatic payments: This ensures that all upcoming payments you have will be paid without being missed or forgotten altogether.
- Check for errors on your credit report and dispute them: Staying on top of your finances and checking your credit report for any errors can help you avoid the negative consequences associated with poor credit.
Check out our full guide on improving your credit score for more credit boosting tips.
Consider iCASH to Help Secure a Rental Property
Remember that even with bad credit, there’s still hope in finding an apartment to rent. With the tips above, you can increase your chances of finding a place that suits your needs and budget. Even if you’re in a bind and need some extra cash to cover a security deposit or other unexpected moving expenses, iCASH provides same day loans for people with bad credit. With iCASH, a poor credit score isn’t a deterrent to get the money you need.