Your credit score isn’t who you are, and we know that. There are many reasons you might have a bad credit score at the moment, but your credit score shouldn’t mean that you don’t have the same opportunities as other renters in this great country. That being said, one of the essential questions to ask when looking at an apartment is "What credit score is required to rent the place?".
Fortunately, as you work to rebuild your credit score, there are rental options out there. It might feel like your only options are moving in with a friend or relative, but this guide is designed to help you find an apartment, even with bad credit.
With your own apartment, you have more independence and can take the next steps to move forward from the circumstances that lowered your credit score in the first place.
Let’s start by looking at credit more generally.
What Kind of Credit Score do You Need to Rent an Apartment?
The simple truth is that you can probably find an apartment with any credit score, or even no credit, so long as you take appropriate steps to get that apartment. However, most landlords are looking for credit scores in the good to excellent range. But there are plenty of landlords who will accept fair credit, as well.
It’s only when you’re looking at a score of 580 or below, that your apartment options usually become more limited.
Good scores are generally around 670-740. Anything above 750 (on an 850-point scale) typically counts as very good or excellent, depending on the credit rating company.
The lowest scores are between 300-580. If you know your scores are in this range, it’s time to be proactive about improving your chances of getting an apartment and improving your score.
It’s also worth mentioning that you might have good or even great credit with two out of the three major credit agencies, and still have a bad rating with the third. Usually, that’s because of a mistake by the credit agency and can be corrected. That’s why checking your score regularly is important.
Unfortunately, you have no guarantee that your landlord will check more than one credit agency, which means that a bad score on one can lower your chances of getting an apartment, even if you really do have a good credit history.
Can You Get an Apartment with a Credit Score of 500?
In short, yes! A credit score of 500 is low, but it’s not insurmountable. It would be best if you planned some extra time for your apartment hunt with scores this low, but you can still rent an apartment. It will take some extra planning, though.
Start by looking for modest apartments owned by private owners or small real estate companies. These kinds of landlords often have more flexibility than big development companies and real estate firms.
It will also be best to keep your expectations in check. With a low credit score in the 500 range, you should expect to pay slightly more for an apartment. With institutional landlords, you may also have to pay more upfront or take additional steps to lower your landlord’s risk.
If you prefer to find a no credit check apartment, your best bet is to go with a private landlord.
The good news is that it can be done, and successfully paying your rent for the full term of a lease can help raise your credit score.
How Can I Get Approved For An Apartment With Bad Credit?
While renting an apartment with bad credit can be tricky, here are some things you can do to improve your odds.
Get Letters of Recommendation:
With a low credit score, one of the best things you can do is seek letters of recommendation from anyone you have a financial association and a good relationship with. The best options are your landlord or bank, both of whom can vouch for your good habits now even if your credit history indicates some past financial missteps.
Another alternative is to ask your direct supervisor at work, or, if you’ve recently graduated, your professors and college advisor. These people are in a position to understand your personal responsibility, which can build trust with a new landlord.
Avoid references from friends and family members, because they can give the impression that you don’t have more professional relationships and references to call on.
If you must use family or friends, try to select people who also have a financial relationship with you, like cosigners on a past lease.
Other Documents Supporting Your Financial Security:
Letters of recommendation aren’t your only option. Chances are you will be asked to provide some evidence of your financial security, but providing additional documentation can help make a better case for you as well.
Documents that you can provide include:
- Recent paystubs
- Proof of regular rental payment at your current location
- Proof of regular utility payments
- Bank statements showing your rental history
Consider a Cosigner or Guarantor:
Another option is to seek someone to sign on to your lease, guaranteeing that you will pay. Cosigners are generally people you know, who may or may not have terms you have to agree to before they sign. Guarantors can also be folks you know but are generally companies that sign your lease in exchange for a monthly fee for backing you.
Either way, having an additional signature on the lease gives your landlord someone to go to in case you fail to pay your rent. Your guarantor/cosigner agrees to pay in your stead, lowering your landlord’s risk.
Get a Roommate:
A roommate might not be your first-choice solution, but having two (or more) people on a lease can raise your chances of getting an apartment. That’s because, even if both of you have low credit scores, there is still a better chance of one or both of you paying rent regularly and on time.
When it comes to low credit, landlords just want to lower their financial liability if you fail to pay rent or are in a position where you can’t pay rent. Roommates spread out the responsibility.
Even if one of you fails to pay rent, the landlord can still probably count on a partial payment to help cover their expenses on the property until something can be done.
Steps You Can Take to Raise Your Credit:
The goods news is that a low credit score is fixable, and every month of good financial habits helps undo the damage. The steps you’re taking now to rebuild your credit score will also show up on the financial documents you can provide to your landlord, so it’s a good idea to start these habits before you need a new apartment.
Pay All Other Bills On-Time:
Utility payments and credit card payments are just as important as rent payments when it comes to a landlord reviewing your financial history. Or, they are just as important if you fail to pay. Paying regularly helps you look better, regardless.
Focus On Paying Off Debt:
Another factor that can impact your credit, even if you’re making regular payments, is a high debt ratio. It might not be possible to pay off a significant chunk of your student loans before getting a new apartment, but paying down a credit card or a line of credit can significantly improve your overall credit score.
Pay Your Rent On-Time:
Another step you can take is to build a history of paying your rent on time. Even if you have a bankruptcy or other issues with missed payments in the past, paying your rent consistently for six months or more can help your landlord decide that you are a good risk. While paying rent on time may not directly impact your bad credit since rent payments are generally not reported to credit bureaus, it can help show you're serious about your rent obligations.