People with poor credit scores could end up paying more than those with excellent credit, who are likely to have the best rates. This is usually because people with poor credit often have little negotiating power when it comes time to try and secure a loan or line of credit.
Having no established history in borrowing money typically means that you will be forced to pay higher interest rates than someone who has proven their willingness and ability to repay all debts in a timely manner.
When it comes to renting, bad credit doesn’t necessarily mean that there’s an eviction on your credit report.
Landlords often find ways around accepting applicants that they consider too risky. However, issues arise when landlords or property managers are able to tell that you’re going into debt just trying to move in.
A situation like that could set off some warning bells, and a rental office could reject an application as a result.
Renting with bad credit can cost you in other ways as well. Not only do landlords typically require first and last months’ rent, but they also demand a security deposit. As far as your actual rent payment is concerned, it can be difficult to gauge exactly how much you might pay with bad credit.
Landlords typically charge higher rates to applicants who have low credit scores as a whole, but the exact amount will depend on your location and the specific property.
When landlords come across a tenant with bad credit, one way they could respond is by refusing to rent out their space at all—but this isn’t always the case.
Landlords understand there are reasons why people might have gotten into financial trouble, and credit reports only show part of the overall picture. Sometimes it’s just one mistake, and the tenant is actually a really good renter candidate.
One thing to keep in mind is that a landlord cannot refuse to rent to prospective tenants based on their race, color, national origin, religion, sex, familial status, or marital status. Additionally, a landlord cannot evict tenants because their credit went bad while renting.
If you can’t afford first and last month’s rent and a security deposit at once, don’t lose hope! While securing housing will be more difficult than someone with great credit, there are still ways you may be able to obtain an apartment while managing your finances.
For example, one option is to have a cosigner. A cosigner is someone who agrees to be responsible for the rent if you cannot pay it. This person should have good credit so that their name will help your rental application look better.
Another option is to try and get a guarantor. A guarantor is someone who agrees to be responsible for the rent if you cannot pay it and they have good credit too.
You can also try and get approved for a government-subsidized housing program. There are many different programs available, so you can research which one would be best for you.
Even though it’s certainly not easy, improving bad credit can help you become eligible for more rental options.
While most landlords are likely to rent their properties to someone with fair credit (599 – 660), some landlords would consider renting to those with poor scores (300 – 599), as long as the credit report shows consistent on-time payments and reduced debt.
Before filling out an application, check your credit report for inaccuracies and dispute any major errors (you can get free copies of your credit reports from all three major reporting bureaus once per year at www.annualcreditreport.com).
If you have bad credit, it’s important to know that landlords are allowed to ask for the contact information of personal references.
If your references are people who are able or willing to vouch for you, then they need to be prepared to provide their names and phone numbers to the property manager or rental agency.
If they’re not willing to speak with the landlord themselves, this doesn’t necessarily mean you’ve been denied a lease—but it will make things more difficult.
It’s a good idea to use people who know you well and are perhaps aware of why your credit isn’t stellar. The main purpose of a personal reference is to attest to your ability to make payments on time.
Lease agreements typically require rental histories from past landlords, so it’s also important to find out whether or not this would be necessary during the application process.
Obviously one of the main concerns that property managers have when choosing a tenant with bad credit is whether they would pay the rent on time. Other common fears include defaulting on lease terms, how well you’ll treat the property, and if you’ll be a good neighbor.
These concerns seem to be valid since evictions are more common for tenants with poor credit. Another concern regarding a credit check is the issue of having a bankruptcy on your credit report.
There are many reasons why someone might have filed for bankruptcy, but if you can show that you’ve paid your bills on time since the bankruptcy was discharged, then your finances may actually be in better shape despite having a bankruptcy show up on your credit report.
The bottom line: If you’re upfront about your situation with a landlord, then the chances are they’ll be able to determine whether or not this is something that you can work through in a reasonable amount of time.
If they know that you’ve been making an effort to improve your credit, there’s no reason why it shouldn’t reflect well on your character moving forward.
It can be more difficult to buy a home if you have bad credit. Lenders will look at your credit score and payment history to determine how risky it is to loan you money. If you have a low credit score, you may be charged a higher interest rate or may not be approved for a loan at all.
Your credit score is one of the most important factors if you want someone to lend you money for a home loan. Bad credit affects your ability to get a loan, your interest rate, and may increase the amount of your down payment.
In short, a low score sends the signal that you’re a risky borrower and could lead to higher rates and stricter terms on a mortgage.
If you have bad credit it is important to consult with a real estate attorney to learn about your rights and protections under the law.
An experienced real estate attorney can help you understand the terms of your lease or purchase agreement, and can also advise you on ways to improve your credit score so that you will be better positioned to buy a home in the future.
In some situations, it may be necessary to have a credit attorney help negotiate with landlords or creditors on your behalf. An experienced lawyer can advise you on the best course of action to take in order to improve your credit and increase your chances of being approved for housing.
16 people have successfully posted their cases
