How To Rent A House With Bad Credit: 9 Things to Consider

By: Lisa Teixeira0 comments

If you’re looking for a house to rent, you know the process is both exciting and overwhelming. It’s exciting to comb through multiple real estate listings visualizing all the different ways you can decorate that space. Similarly, it can also be overwhelming if you’re concerned about how you can rent a house with bad credit.

When you fill out applications for a rental property most will include wording that gives the property manager permission to run a credit check. Thus, allowing landlords the ability to deny your rental application if your credit score is less than ideal.

If you’re nervous about trying to rent with bad credit, here are some tips you should consider when looking for your next rental.

How To Get Approved For a Rental Home With Bad Credit

1. Look for Property Owners Who Don’t Check Credit

The majority of landlords will require you to sign off on a credit check. It’s perfectly legal and very common. This is particularly prevalent with large property management companies. Historically, they’re also more inclined to turn applicants down based on having a bad credit score.

Now, you’re probably wondering how can I convince my landlord to let me rent with bad credit? The answer is to look for properties that are owned by individual landlords. With this method, you might find someone who doesn’t check your credit score. They may also take into account the quality of your references, rental history, and income over a credit score.

You can look at Craigslist.ca, Airbnb.ca, the classifieds section of your local newspapers, or contact a real estate agent to help you with your search.

2. Partner with a Guarantor or Co-Signer to Help Rent a House with Bad Credit

If you’re looking to rent with bad credit, consider asking a confidant to cosign the rental agreement or act as a guarantor. A co-signer is immediately responsible for any missed payments, making them a desirable option for most landlords. A guarantor is only financially liable after a landlord absolutely cannot collect from the tenant.

The ideal candidate has a solid credit report and is comfortable with the responsibility they’re assuming. If any party refuses to pay the outstanding amount, the landlord can sue both of you. In light of this, choose wisely and make sure to always communicate any upcoming missed payments so they aren’t caught off guard.

3. Gather Proof of Income and Set up Direct Deposit

Landlords question your ability to pay rent on time when they see a low credit score. One way to negate that is to prove that you have a stable source of income.

Put together a package of recent pay stubs going 3 months back, tax returns and if possible, a letter from your place of work verifying your employment status and income. This will help assure your landlord you can afford to meet the monthly rent payments.

You can also opt to have your rent automatically deducted from your bank account to help pacify any anxieties your landlord may have.

4. Offer to Increase your Security Deposit or Pay in Advance

So you have proof of income but your landlord is still hesitant. At this point, you’re seriously wondering how can I convince my landlord to let me rent with bad credit? One thing to consider is a show of good faith, in this case monetary. You can offer to pay a larger security deposit which would theoretically be used to secure against any losses or damages if you happen to miss rent.

As it’s standard practice for your landlord to ask for first and last month’s rent, you can set more money aside to pay for at least three months of rent to help secure your lease.

5. Be Straightforward about your Circumstances

If you’re wondering how to get approved for a rental home with bad credit, start off by being honest. A low credit score could be due to several things like a temporary loss in employment or taking on debt to start a business.  If you explain your credit status and the steps you’re taking to improve it, a potential landlord may be willing to overlook that blemish on your record because of your honesty and character.

6. Be Punctual and Friendly

Just as honesty is the best policy, you never get a second chance to make a first impression. The first step to nurturing a good relationship with your landlord is being on time for meetings or phone interviews, being respectful, and easy-going. Landlords want someone who’ll be easy to deal with and someone they can trust to take care of their property. If you combine a good attitude with being honest, a landlord will be more inclined to give you a break if you’re trying to rent with bad credit.

7.  Secure Credible References

If you want to show a landlord that you’re fully capable of renting with bad credit, gather authoritative references that demonstrate your character and reliability. Try to include a reference from a previous landlord, your employer, even a reference from your bank or credit card company that proves you’re working towards improving your credit score can go a long way.

8. Find a Responsible Roommate to Help Rent a House With Bad Credit

Perhaps the easiest way to rent a house with bad credit is to get a reliable roommate with good credit.  In the case that your landlord allows only one signatory, your roommate with good credit assumes the risk and sublets a portion of the property to you.  Another perk of getting a roommate is splitting the bills.

Similar to getting a guarantor or co-signer, make sure you and your roommate have a good relationship and understand the implications of defaulting on a payment.

9. Wait and Get Your Credit Score Back Up

In certain cases, renting with bad credit may prove to be too much of a challenge, meaning you’ll have to take the time to improve your credit score before you can get approved for a rental. If you’d like to rent without a guarantor or roommate, this is also an option for you.

The method behind improving your credit score is simple- pay your bills on time and work towards settling your debt. If you budget properly you’ll be a desirable candidate for your ideal rental in no time. For more information on how to improve your credit rating, take a look at this post from the Government of Canada. 

How To Get Approved For a Rental Home With Bad Credit: More Alternatives

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Debt Consolidation

If you’re reading this article you may be wondering how can I convince my landlord to let me rent with bad credit? Well, you can let them know what steps you’re taking to improve your credit score and debt consolidation is one of them. This method combines most of your debts into a single debt leaving you with a monthly loan payment at a set interest rate. The benefit of this method is that your loan can have a lower interest rate than the average interest rate you’re currently paying on your debts.

Credit Counseling

If your credit score is really concerning because of debt and you’re worried about your chances of being approved for a rental, you may want to consider credit counseling first. Credit counseling will help you settle some of your debts by combing through your financial situation in detail and formulating a long term plan to resolve your debt.

Debt Settlement 

If you have a significant amount of debt that’s seriously overwhelming you, opt to enlist the services of a debt settlement company. A professional will be working in your best interest and through the process of settlement negotiation, they’ll present you with different options to resolve your debt as fast as possible.

Not only does this method take some of the stress off of your shoulder, but a debt settlement program also won’t show up in your credit report like credit counseling will.

Renting a House With Bad Credit: Final Thoughts

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Bottom line: having bad credit is not the end of the word. It may decrease your chances of trying to rent with bad credit but it won’t completely destroy your chances of securing a rental. Show your prospective landlord that you’re an easy-going, responsible person with a steady job and a hardworking attitude towards improving your credit circumstances. Furthermore, you can go above and beyond and take on more risk by offering more money upfront to secure your rental. There’s also the option of partnering up with a co-signer or a roommate who has outstanding credit to help with the rent.

Frequently Asked Questions

Can I get an apartment with a 500 credit score?

Your credit score often ranges from 300 to 900. The belief is that the higher the credit score, the more likely you are to pay your bills. For this reason, a higher credit score is more desirable to prospective landlords.

Every institution is different, but a credit score of 500 indicates that you need some work and most landlords will be reluctant to rent to you.

What is the lowest credit score required to rent a house?

Generally, if your credit score is 600 and up you should have no problem meeting your landlord’s credit score threshold.

Can I rent with bad credit?

Renting with bad credit is often possible if you can justify your credit situation. Explain to your landlord why your credit score is low and what steps you’re taking to repair the situation. Also, make sure you have enough cash to meet your monthly rent and that you’re not renting above your means.

What happens if I fail a credit check for renting?

Don’t panic, there are a couple of different steps you can take if you fail a credit check for renting. First, make sure your application was written out perfectly with no mistakes. Next, find out what your credit rating is so you can review your history and make sure there are no errors or omissions that could improve your rating. If you see an error, get on the phone and solve it.

If it turns out you need to improve your credit rating because of too much debt, here are some tips to consider:

  • Always pay off high-interest credit cards on time.
  • To help get rid of your credit card debt consider only having one or two cards.
  • Use a healthy mix of debit, cash, and credit.
  • Set calendar reminders to pay all of your bills on time and when possible, set up direct deposit payment.
  • Instead of paying bills and/or credit cards once a month, try twice. Whenever you get a paycheck, put some aside to pay the bills.

What will make you fail a credit check?

A common reason why credit checks fail is that your current address is not able to be verified. This happens if you don’t pay the bills associated with that address, or if you haven’t lived there long enough, or if your name isn’t on the lease agreement. By reviewing your credit report before you submit applications for rent, you can catch a mistake like that.

The Canadian Mortgage and Housing Corporation website is a great resource if you’d like to learn more about the standards of your credit rating when looking for a rental.

What credit score do renters look at?

It’s standard practice for a landlord to run a credit check to see your financial history. A credit report gives a landlord insight into the following information:

  • Whether you pay your bills and debt on time
  • If you have any bankruptcies
  • Your rental history
  • If you have any current debt and how that number compares to your income.

Your credit score is calculated based on that information. It’s a numerical value from 300 to 900 that indicates your financial history with credit. If there’s a particular reason why your credit score is on the lower end, it’s worth it to discuss that with your landlord beforehand as it may increase your chances of being able to rent a house with bad credit.

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