One side effect of the meltdown in home mortgages is that many former home owners are now looking for a place to rent - and dragging along bad credit from foreclosures.
While houses that once were potential rentals by investors are now sitting empty, waiting for bankers to take action, the rental market is getting tighter and tighter. Renters with perfect credit will almost always be at the head of the line, but even with bad credit you can find a place to live. And in a few circumstances, a landlord may even be hoping for a poor credit report.
Renting with Bad Credit
- While paying for a credit report may be the last thing you want to do if money is tight, you need to know what's in there. Most credit reports, good and bad, contain errors of some kind, which can range from a typo in a name or address to duplicate entries or a stray from someone else's credit report entirely. And sometimes, companies who reported an unpaid bill may not bother to report it when it's paid.
- Look for private rentals where the unit is rented by the owner or his or her representative. Houses and apartments managed by professional management companies usually avoid renters who are less than perfect in any way - that's their job. An independent owner may be more flexible or more desperate for a renter than that huge 500-unit mega building.
- Found the perfect place with a great landlord? Don't be tempted to give up the search. It's a numbers game, and the more applications you have in, the better your chances are. Keep looking and putting in applications. However friendly the landlord seems before the credit report is run, that may change with a bad score. But don't panic - in many cases a landlord will be looking primarily for rental or utility payment problems that have shown up on your credit . Other dings may not matter as much to them.
- Is your report truly horrific? Tell the landlord. He or she may not want to bother running it, and if they want to charge you, it may not be worth it to you. And you may win some points for your honesty and attempt to not waste their time. This could end up getting you the apartment rather than the less-forthcoming person with a slightly better credit score.
- Finally, many places allow landlords to charge extra deposits to renters with bad credit. If they are in their own financial crunch. Many of them are also suffering from the decline in real estate values, with over 25% of foreclosures occuring to real estate investors who own more than one property. They may be glad to take the risk on a bad credit report so they can get more money up front. If you're cash rich and credit poor, you may actually have an advantage over another renter who has pristine credit.
- Don't be afraid to negotiate. While landlords in this market may be pushing for bigger deposits, they will sometimes allow you to spread out the deposit over several months. Are they planning on painting the place or putting in new carpet? Offer to rent it without the refurbishments.
- Check the cheap ads in free newspapers, on Craig's List, and on bulletin boards. Houses and apartments advertised in newspapers may have higher standards because they are already paying a premium just to advertise the rental. Look at the ads that are placed for free first.
Copyright T. Regula. Contact the author to obtain permission for republication.
