Renting a home with a bad credit score is possible! However, it’s critical to know that bad credit will result in some rental challenges. Most landlords require good credit for approval, so renters with bad credit may need to apply for multiple property listings.
Remember that while a poor credit score will create rental challenges for you, it’s still possible to get approval for a decent rental unit. In this article, we’ll go over the rental approval process and what steps you can take to rent a home with bad credit.
Understanding Credit Scores
As a prospective renter, it’s vital to understand your credit score. A credit score is a direct reflection of your credit history. The average credit score range is 300 to 850 points.
When you use credit products, your lender will report your payment information to at least one of the three major credit bureaus. The three credit bureaus include TransUnion, Experian, and Equifax. A credit bureau collects information about your credit history and organizes it into an easy to read credit report. This report is made available when you agree to undergo a credit check. A hard credit check is only required when you apply for any type of financial product.
A credit scoring model, such as FICO or VantageScore, is used to calculate your credit score based on your existing credit history. A high credit score range, 740 to 850, is preferred by most lenders and landlords. However, you may still qualify for financial products and housing with a low credit score range.
What is the Minimum Credit Score Needed to Rent an Apartment?
The minimum credit score needed to rent an apartment varies, as every lender has their own approval requirements. However, most lenders would agree that there are good and terrible credit scores.
This helpful chart shows the 5 ranges of credit scores and what they may imply to landlords:
| Credit Score Range | Description | Implications for Landlords |
| 300 – 579 | Poor | High risk of not being able to pay rent; likely to have past delinquencies; may require a cosigner or larger security deposit. |
| 580 – 669 | Fair | Higher risk; may have some past issues; likely to require a larger security deposit. |
| 670 – 739 | Good | Moderate risk; generally reliable; may require standard security deposit. |
| 740 – 799 | Very Good | Low risk; likely to make rent payments on time; may qualify for lower security deposit. |
| 800 – 850 | Exceptional | Very low risk; highly reliable; may qualify for incentives or lower security deposit. |
As you can see, a good credit score is any score higher than 670. In 2023, the average credit score was reported to be 717 by FICO, which is “good.”1 Many landlords have a 670 minimum score requirement. However, there are landlords that offer flexible credit requirements, so it’s entirely possible to rent an apartment with a poor or fair credit score rating.
How to Rent a Home with Bad Credit
If you want to rent a home with a poor credit score, there are steps you can take to increase your chances of getting approval. Here are some helpful tips to get the living space of your dreams with subpar credit.
Improve Your Credit Score
Improving your credit can increase your housing and financing options. If you need help getting started, here are four simple credit repair steps you can take:
- Make Timely Payments – Paying your monthly bills on time can help you build credit over time! Timely payments make up 35% of your credit score, so it’s important to avoid late or missed payments.
- Reducing Debt – It’s almost impossible to improve credit if you have too much debt. The average American adult has roughly $66,772 in debt.2 You can work on reducing your outstanding debt by budgeting, consolidating, and increasing your monthly payments.
- Monitor Credit Reports – Make sure you monitor your credit reports annually. Any inaccurate information can further hurt your low credit score. Correcting errors on a credit report can help you repair and build credit.
- Request Credit Limit Increase – Try asking your lender for a credit limit increase. Increasing your total credit limits can reduce your credit utilization, which helps you build credit.
Find Lenient Landlords
You have a better chance of getting approved as a renter with subpar credit through private landlords than property managers. Property managers are hired by landlords, while private landlords own the property and are more involved with the approval process.
Some private landlords have flexible renting requirements, which is why they are also known as lenient landlords. Lenient landlords may not require good credit if you have proof of your ability to make rent payments on time. You can find lenient landlords by searching for small properties, local apartments in your neighborhood with “for rent” signs, or online listings posted by the owner.
Provide Income Proof
Demonstrating to a landlord that you have a stable income can help you get approved for a rental property with low credit. Stable income shows that despite facing financial issues in the past, you now have the means to afford a rental property. Most people use pay stubs or bank statements as proof of income. If you provide pay stubs or bank statements, your landlord may want to see documents from the past two to three months. Some landlords may also accept alternative income if your earnings are more than enough to cover rent payments.
You may be able to use the following documents to show proof of alternative income:
- Tax returns
- Employment verification letter
- Invoices or contracts
- Pension statements
- Social Security award letter
- Alimony or child support payments
Negotiating Lease Terms and Deposits
A low credit score may worry a potential landlord, but you can ease those worries by being open to flexible terms. For example, you could offer a higher security deposit. A security deposit is often required to mitigate risk, and it’s typically equal to one month’s rent. Offering a larger deposit demonstrates that you are serious about adhering to the lease agreement and maintaining the property.
Lease agreements are typically twelve months, but offering a shorter lease term as a trial period could help you get approved. Short lease agreements are generally three to six months. These flexible terms provide a convenient exit strategy for any landlord who wants to reduce the long-term risks of working with low credit renters.
Use Cosigners
Applying for a rental unit with a cosigner may help you get approved with a poor credit score. A cosigner, also known as a guarantor, is someone with good credit that guarantees the monthly rent payment. In the event renters cannot continue making payments, guarantor agreements protect landlords.
The guarantor is financially responsible and must pay rent if the renter cannot pay. Guarantor agreements provide many cosigner benefits in addition to improved approval chances. Cosigner benefits include more housing options, better lease terms, faster approval times, and improved credit from timely payments.
Optimize Rental Resumes
Creating a rental resume could help improve your chances of getting approved for a rental with subpar credit. A rental resume is a tenant profile that shows a potential landlord detailed information about you. You can include basic personal information and answers to questions a landlord may want to ask. For example, if your rental history includes missed payments due to the loss of a job, you could provide an explanation and a plan of action if you experience unemployment again. If you don’t have any rental history to provide, your tenant profile can include references, pet information, and your reason for moving out of your current living situation.
Building Positive Relationships and References
As someone with subpar credit, it’s crucial that you provide potential landlords with a reference letter. A reference letter can include professional and personal references so a landlord can get a complete picture of your character. Landlords do not always require reference letters, but they can help build a tenant-landlord relationship.
Personal references can include past roommates, friends, and family members. Most people use personal references because they’re easier to acquire, but professional references can hold more weight for landlords. Consider talking to your employer and a few coworkers about your interest in moving to a new living space. Ask them if they would be comfortable providing contact information and speaking with a potential landlord about your employment status, work ethic, and character.
A list of professional and personal references demonstrates transparency. The answers your references provide can help strengthen a tenant-landlord relationship before getting an official approval decision.
Exploring Alternative Housing Options
If you need a new living space quickly, it may be in your best interest to consider alternative housing options. A sublet is a co-housing option that you should consider if you have low credit.
When a tenant cannot complete their lease agreement, they may sublease their rented property, which means adding you to the existing lease.
A sublet may be more affordable and easier to get than a traditional lease. However, subletting is risky for the landlord, so many do not allow sublease agreements. You can look for an available sublet and other alternative housing options through online listings and forums.
What do landlords look for in rental applications?
When landlords receive rental applications, they will look at specific factors when determining approval. For example, these are some key factors that landlords look for:
- Credit Report – Your credit report contains important information about your outstanding debts, payment history, and financial responsibility. Part of the credit check process. You must give permission for a financial institution to pull your credit report.
- Proof of Employment – You will likely need to provide proof of employment to a landlord to show you are financially stable. Documents that show proof of employment include pay stubs, letters of employment, invoices, or contracts.
- Criminal History – Most landlords require comprehensive background checks to screen tenants. Your criminal history report is an important factor in the approval process but may not disqualify you from getting approved.
- Rental History – Your rental history is important to the landlord because they want to know of any evictions or past damage to properties. If you have had prior evictions, it’s important to provide an explanation in a rental resume.
Do You Need Options For Bad Credit?
It’s entirely possible to rent a property with bad credit history! And there are steps you can take to improve your chances of getting a rental application approved, such as looking for lenient landlords, creating a rental resume, gathering references, and using a cosigner.
Your housing and financial options may seem limited with bad credit, but there are plenty of landlords and lenders with flexible requirements. At CreditNinja, we offer online personal loans with competitive rates. We work with all types of financial backgrounds, so you may be eligible despite having a bad credit history! You can apply online or through the CreditNinja app and get a same day approval decision.*
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