For many Americans, their first brush with credit scores comes when it's time to move out and get their own place. This can be a nerve-racking situation for a young person. As if finding a suitable spot, negotiating with a landlord and leaving home weren't complicated enough, the dark cloud of a credit check looms over the whole process. So what can you do if you have little or no credit and need to find a place to live? Read on to find out.
Yes, a low score will affect your search
This can't be too surprising. The credit report system serves one main purpose: telling lenders if they can trust you or not. If you have bad credit, you have a bad track record and, in the minds of some, reason to be doubted. If you have no credit, you have just that: no creditable evidence that you will be a responsible borrower.
At first glance, it might not seem like the landlord is a lender. The apartment or house in question is their investment, however. They've staked their livelihood to the place, and you're asking to live in it. They have to trust you enough to let you move in and occupy their space.
So, yes, your bad credit could affect your search. A low score could cause landlords to deny you outright or to impose additional conditions on your tenancy. So what can you do?
Find a co-signer
One option is to find someone to co-sign your lease. This isn't always easy, as it's a big commitment for whoever is helping you out. A family member is the best option here. This isn't a job for a casual acquaintance.
Assuming your co-signer has better credit and/or more reliable income than you do, getting their name on the contract could assuage all of the landlord's concerns. Beware that your credit is still on the line, though, and that if you don't follow through on your obligations your co-signer will suffer the consequences as well.
Find a roommate with better credit
This approach is pretty similar to getting a co-signer. If you can nab a friend with superior credit to move in with you, the landlord may be more likely to overlook your relative unreliability. This should be easier to accomplish than finding a co-signer since this person isn't only doing you a favor. They need to find a place to live too, and they get to enjoy the pleasure of your company along the way.
Offer a larger deposit
If you have a bit of extra cash on hand and don't have anyone to rope into signing with you, laying down a bigger deposit might be your best option. A larger deposit can be requested by either party - you could offer this to the landlord in order to soften their reservations after your credit check, or they might request it from you. If you need to get the job done, though, it's not a bad option. You won't actually be losing more money. You'll just be putting more down upfront, and you won't be risking anybody else's credit along the way.
Prepare ahead of time
This is your best choice, hands down. Rather than ending up in a less than ideal situation, start to work on your credit health ahead of time. Find a few good credit cards, make on-time payments, build a credit history and then reap the rewards when prospective landlords gladly roll out the red carpet for your move-in day.
Trying to rent with bad credit isn't impossible; it's just a little bit harder. If you can find a reliable co-signer or swing a larger deposit, then you can work around your extra obstacle. If these aren't options for you, though, don't lose hope. Finding a great place to rent is all about persistence!
About the Author: Mike Goldstein is a Content Writer at Credit Karma. Since joining the team in June 2013, he's been delivering the financial know-how on the daily. When away from work, you can find Mike watching hockey, Twittering for hours and frequenting trivia nights.
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