If you need to know how to rent a house with bad credit, it’s possible. You have an uphill climb, but renting a home with bad credit isn’t a completely hopeless cause. Here are some tips from a landlord.
How do I know it’s an uphill climb? Other landlords ask me if I’d rent to someone with bad credit. But what I’d tell you is probably more valuable to you than what I tell them.
When you have an uphill climb, the more prepared you come, the more advantage you can gain. When you come to see the house, bring proof of income, one or more references, enough information to fill out an application right away, and a check or cash to pay the application fee. Do all of the little things to gain an edge, because you’re going to need every edge you can get.
If your application can start out at the top of the pile, it positions you to take advantage if other applicants make a mistake. And when you’re trying to rent a house with bad credit, being in a good position when other potential applicants are making mistakes is nearly critical. Landlords always prefer the so-called highly qualified applicants, those who have good credit and higher incomes.
But many applicants take a day or two or longer to return an application. If you get your application in early and you’re already in the process while the others are dragging their feet, it tilts the advantage your direction.
Have enough income, and proof of income
As a landlord, my first priority is income. With enough money, you can make it work. If you don’t have enough money, a credit score of 900 won’t make a difference.
My rule of thumb is that your weekly income needs to meet or exceed the rent. If the house costs $900 a month, you need to make $900 a week. This exceeds IRS guidelines, but when you have bad credit, I want to see some margin for error. I turn down people for lack of income far more often than I turn them down for bad credit. Also make sure you’re calculating your income properly.
I’ve had applicants who make $12 an hour who want to rent a house that costs $1,000 a month. I’m sorry, but that’s just not enough money to make it work.
So, first, I recommend making sure you make enough money, or very close to it. Second, I recommend bringing at least two pay stubs with you.
I once refused to take an application from someone because he made minimum wage and had bad credit. Based on the questions he was asking me, he probably could have gotten a construction job making much more than minimum wage. For whatever reason, he hadn’t. That’s on him. If you want to get out of that small apartment and into a house, you may need to get a better job. When I was 25, I didn’t make $900 a week. I eventually got a better job. It took a while.
What about savings?
Having a bank statement that proves you have some savings doesn’t hurt. Then again, I had a conversation with another landlord once about a prospect with a credit rating in the 500s. “If this guy has savings, why does he have a credit score of 500?” I asked.
Someone who isn’t willing to dip into savings to pay their other bills probably won’t dip into savings to pay rent, either. At least that’s what I have to assume.
Have a payment plan in place for your other debts
If you have judgments against you, or outstanding debts, you’re going to have to prove to the landlord that you have a plan in place to pay those off if you want to rent a house with bad credit. If you’re not serious about paying off your other commitments, the landlord has to assume you won’t be serious about paying rent, either. That said, if you’re making your payments and still have enough left over to cover rent and other living expenses, that’s a good sign.
If you can bring a letter of reference from a current or previous landlord stating that you pay the rent on time, this helps immensely. If you pay the rent on time now, you’re likely to continue paying the rent on time in the future.
A letter from a supervisor at work stating that you’re a responsible employee and stating how long you’ve worked there is another plus. If you’ve worked there a long time and have a good track record, that tells a prospective landlord you’ll probably continue to have a job in the future. If you’re about to be promoted, a letter stating that will help even more.
Bringing proof you pay your utility bills on time also helps. Save the part of the bill you don’t mail back in. If that portion of the bill shows you’re paying on time, and you have six of them, that leaves a good impression. Paying your utility bills is always going to be a higher priority than paying rent. If you pay those on time, that tells me you’re probably responsible enough to pay rent on time. If you don’t pay those, I know you won’t pay rent.
As a landlord, what I need more than anything is evidence that paying the rent every month is going to be a priority. Bad credit suggests otherwise. Bring me evidence that counters that suggestion if you want to rent a house with bad credit.
Show up on time
My least favorite part of being a landlord is dedicating my Saturday or Sunday afternoon to showing a house to 12 different people and several of them not showing up, or showing up late. If you show up on time, act respectful, and fill out an application right away, you have an advantage over the people who didn’t show up, or the people who show up late and spill over into the next showing. Some of the no-shows are still interested and will get another appointment, but if your application is already in, I’m going to have a lot less patience with the deadbeats.
Well-qualified applicants lose their edge when they don’t show up on time. Most of the time, I’d rather run your application now than wait until next Saturday to show the house to someone who couldn’t be bothered to keep an appointment the previous Saturday.
Be willing to pay more
People with bad credit pay higher interest rates. As a landlord, I can say that if you want to rent a house with bad credit, I might be willing to rent to you if you’re willing to accept a modest rent increase to cover the increased risk. The caveat is that you have to be able to afford it. If you make $900 a week, I’m not doing either of us any favors by renting to you for $1,100 a month. Being that far over your head means you’re one or two unexpected emergencies away from not being able to pay rent.
Unexpected emergencies happen. I once had a marginal tenant get hurt at work and fall behind in paying rent. Getting hurt wasn’t her fault, but her priorities, in order, were her social life, her new car, her utilities, and paying rent. That’s why I want to see some financial margin, so there’s something left by the time a tenant gets ready to pay me.
By the same token, if you give me $100 worth of slack every month, then I have some money to use if I have to cut you some slack one month.
Pay by direct deposit, or provide post-dated checks
Be willing to pay by direct deposit on the 1st or 15th of the month. Many banks offer this service through online bill paying. If you set up payment arrangements before you have the chance to spend the money on something else, your credit rating matters less. The money is there and with no hassle of making trips to the bank or waiting for the mail. Landlords like that, because it reduces their risk and it saves them a lot of time.
If that’s not an option, try this. Offer to provide 11 checks dated the 1st or 15th of every month you’ll be there when you move in. It eliminates waiting for the mail and provides reasonable assurance the money will be there every month. That’s almost as good as direct deposit, as far as a landlord is concerned. But setting up direct deposit is better for both of you, since the laws around postdated checks vary from state to state.
All of this requires having a bank account. Needless to say, landlords like for you to have one. There’s a certain degree of maturity, responsibility, and groundedness associated with having a bank account and all of those are good signs.
Many renters don’t have bank accounts and that turns into a hassle. Dealing in cash is dangerous and most landlords don’t want to do it. Making these kinds of arrangements gives you an edge over a highly qualified applicant who insists on paying cash in person. As a landlord, I don’t care nearly as much about credit score once I have reasonable assurance that I’ll have the money. To rent a house with bad credit, take the credit out of the equation.
What about providing money in advance?
That said, I don’t want six months’ worth of rent in advance. Giving money in advance is a common rental scam. Some people will pay for six months, quit paying, and then squat in the house for as long as they can. Seasoned landlords know this and won’t make those kinds of arrangements in order to prevent it. Even if your intentions are pure, most landlords still aren’t interested. Once you get out of the habit of paying rent every month, it’s hard to get back into it.
Line up a cosigner
Something else that can help is to line up a cosigner in case you need it. A cosigner essentially says that if you don’t pay, the cosigner will. Now, as a landlord, I want the cosigner to be someone with high income and a good credit rating, since that person may end up paying two households’ worth of living expenses some months.
It’s better to line up the cosigner in advance and not need it than to delay. As a landlord, I always prioritize a potential candidate who doesn’t need a cosigner, but an imperfect candidate who has everything they need and fills out an application right away will take priority over a well-qualified candidate who’s wishy-washy.
If you have a sympathetic friend or relative with good finances who’s willing to help you, show some humility and ask. But also don’t take advantage of them. Stiffing a friend or relative over a large sum of money is toxic to relationships.
Get a roommate
If you don’t have enough income or good enough credit on your own, having a roommate to split the rent can help. Frequently it takes two or even three adult incomes to afford rent. Roommate situations do tend to be less stable than a family unit, so a landlord may favor a family-type situation over a situation involving multiple roommates. I’m not too keen on renting to three singles in their 20s, as the chances of one or more of them getting involved in a relationship and moving out within 12 months is high.
That said, being able to pull in a roommate, especially a roommate with good credit, can make an impossible situation possible.
Don’t be picky if you’re trying to rent a home with bad credit
Putting luxury kitchens and bathrooms in rental properties isn’t cost effective. Luxury accommodations wear out before the landlord makes the money back, so don’t expect them. Renting a house isn’t like buying. If you give a landlord a long list of things you want changed, your application will go to the bottom of the pile, or into the trash. The previous occupant rented the house looking like it does now, and someone else is willing to rent it like it is now.
I’ve had prospective tenants turn up their noses at vinyl floors or basic appliances. I have vinyl floors, old windows, and basic white appliances in my own house. Most landlords I know live in pretty modest houses themselves, and keep cars until they have 200,000 miles on them.
Going in with HGTV expectations and a low credit rating is a toxic combination that will make it impossible to rent a home with bad credit. A landlord might have to wait another week to find a tenant with a good credit rating and modest expectations, but every landlord I know is willing to do that.
Straighten out your priorities
I may come across as preachy, but if you have bad credit, it can be a sign of bad priorities. The basic human needs are food, clothing, and shelter. That means providing food, clothing, and shelter for your family and yourself needs to be your highest priority. Not beer on Friday and Saturday nights. Not a new car. And not a closet full of designer clothes.
Maybe this is a bit harsh, but in my experience, it’s appropriate. I’ve offered to sit down with tenants and show them how to put together a budget and stick with it. I’ve never had one take me up on the offer, but here’s how to put together a debt repayment plan if you’re interested. There are ways to improve your credit. If you take the steps now to better yourself, you’ll thank yourself later.
If you want to rent a house with bad credit, show up with as much proof as you can that your priorities are in good shape to get ahead of the game.
I’ve also had prospective tenants lie before. That usually doesn’t work. If you’re trying to rent a house with bad credit, unpleasant surprises are usually a showstopper.
A competent landlord screens tenants, and if you lie about what you make, your credit score, or your past rental history, it will come out in the screening. Be up front about everything you can, and if you’re estimating something, be honest that it’s an estimate. If your story doesn’t match what’s in the screening, it will catch up with you. It’s a good bet you won’t get the house.
If you have a criminal record, be honest about that too. If it’s traffic tickets, your landlord probably won’t care too much. And if it’s something more serious, be prepared to have references who will vouch you’ve straightened yourself out.
The same goes for prior evictions. Landlords really don’t like prior evictions, especially if they come up as a surprise. If you have prior evictions on your record, you have an uphill climb. You’re going to need character references and a cosigner. You may need a roommate too, on top of the other two things, if you’re trying to rent a home with bad credit.
What about foreclosure?
For whatever reason, foreclosure isn’t as big of a deal as eviction. Every tenant I’ve approved who had prior evictions ended up being a problem for me. I’ve had lots of tenants who had foreclosures in their past. Some were great tenants. Even those who weren’t great paid the rent most of the time. The only tenant with a foreclosure in her past who gave me trouble also had an eviction in her past.
A foreclosure isn’t a showstopper. All things being equal, it’s better not to have one, but in my experience, most people who’ve had foreclosures took it as a wake up call. By all means disclose it. But foreclosure doesn’t automatically mean no if you’re trying to rent a house with bad credit.
Wrapping up how to rent a house with bad credit
So, in closing, if you want to rent a house with bad credit, you greatly increase your chances if you line up a few things before you even look at your first home. Here’s that list.
- Be on time
- Be respectful
- Bring at least two pay stubs
- Make sure you make enough in a week to cover the month’s rent
- Be prepared to pay extra to cover the additional risk, and make sure you still make enough to cover it
- Bring utility bills to prove you pay your utility bills on time
- Have proof you’re making payments on other outstanding debts
- Bring letters of reference from your boss, landlord, or ideally, both
- Be ready to fill out an application right away. Have your work address and 2-3 previous home addresses
- Line up a cosigner in advance
- Be prepared to pay the application fee right away
- Set up direct deposit or provide 11 post-dated checks at move-in
- Have realistic expectations and priorities
If you want to rent a home with bad credit, you have an uphill climb ahead of you. But if you come prepared, you can do it.
I do think most landlords are sympathetic. But most of us have been burned enough that we go in skeptical, and it’s going to take some convincing. If you go in with everything on my list above, you’re equipped well enough to stand a chance.