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According to the Consumer Financial Protection Bureau, 50 million American adults had no credit score in 2015, and 26 million of these had no credit history at all. For many would-be tenants this could cause a problem.
When renting an apartment to new tenants, a landlord is likely to run a credit check. If you have a poor credit score, a landlord is less likely to rent to you. If you have no credit history, you are likely to have the same issue.
If you keep hitting a brick wall with landlords as soon as they discover you have no credit history, it’s likely that you’re feeling demoralized. Continuous rejection does that. It doesn’t have to be like this. If you understand how to get an apartment with no credit history, landlord rejections will be a thing of the past.
Read on and learn how to turn your lack of credit history into a positive, and the tactics to persuade landlords to rent to you.
Why Don’t You Have a Credit History?
A credit history is a record of your financial life. This includes:
- All the debts and loans you have had
- The amounts you borrowed
- Your repayment records
- How much credit you have available, and how much you have used
- Your current liabilities
Your credit history also includes information such as whether you have been bankrupt, any liens or judgements against you, the credit cards you hold, and so on.
If you have never had a loan, or credit card, or other type of borrowing, you don’t have a credit history.
Why Landlords Don’t Like Renting to Tenants with No Credit History
The credit reporting agencies score your credit history and current financial situation. If you have been late making payments on credit accounts or defaulted on a loan, your score tumbles. The lower your credit score, the higher risk you are considered to be.
Generally, landlords want to rent to tenants with an above average credit score. According to Experian, the average FICO (Fair Isaac Corporation) credit score in the United States is 703, on a scale that ranges between 300 and 850.
With no credit history, you have no credit score. Landlords have no reference point to judge you against, because you have no history of paying your debts on time. For many landlords, no credit history spells trouble.
Be Positive to Figure out How to Get an Apartment with No Credit History
You can beat a landlord’s negativity by being positive about your lack of credit history. You’re not alone, either. According to research by the Consumer Financial Protection Bureau, 50 million American adults had no credit score in 2015, and 26 million of these had no credit history at all.
Being in the same boat as millions of others should give you some comfort. How is it that so many others with no credit history can rent an apartment? What’s their secret?
Partly, their success is because they turn what landlords see as a negative into a positive. You can, too. Point out that you have no credit history because you have never had any credit. You’ve never been in debt, and you’re not in debt now. All your earnings or other income can be used exactly how you wish – including paying rent on time, every month.
9 Strategies to Overcome Negative Landlords When You Have No Credit History
Now that you’ve made your prospective landlord more positive about your lack of credit history, it’s time to clinch the deal.
Here are nine strategies that will help you do this.
1. Provide a Co-Signer
This is the best strategy to get an apartment when you have no credit history. A co-signer guarantees your rent. That’s powerful. If you can’t pay, there is someone who will.
Usually, a co-signer is a parent, brother or sister. Whoever you ask, the co-signer should have a good credit score – otherwise, their guarantee won’t be worth the paper it is written on.
When asking someone to be a co-signer, you should make sure they know their responsibility. If you do default on the rent or if the landlord wants to evict you, your co-signer’s credit rating could be damaged.
Don’t take your co-signer for a ride. Even though your rent is guaranteed, your friendship might not be.
If you cannot get a friend or family member to act as guarantor for you, there are companies that will act as a guarantor. However, according to Naked Apartments, companies like Insurent Lease Guaranty and The Guarantors may need you to earn more than 27.5 times the monthly rent.
2. Get a Co-Tenant
Two tenants could be better than one. Double the earnings coming in should make a landlord feel more comfortable. But you must follow the same rule as getting a co-signer – your co-tenant must have a good credit score.
Again, you should make sure that your co-tenant is happy about the arrangement. If you can’t pay your half of the rent, the landlord can demand it from the co-tenant. If they can’t afford your share, their credit rating could take a dive.
Take our word for it, your word will not be enough to secure an apartment from a doubting landlord. It doesn’t matter that you’ve explained why you have no credit history. The landlord wants to see proof that you are a good bet financially.
What better way to do this than to prove your income? Gather your last three to six months’ paychecks together and show the landlord. Most landlords want their tenant’s income to cover the rent three times or more – if you can show this, then you’re on your way to landing that apartment.
4. Show the Landlord the Money – Step 2
If you have other regular income, savings, or investments, take proof of these with you, too. Knowing that you have money behind you often shifts the balance in your favor.
If you lose your job or have a bad month, the landlord knows that you can still pay from other means.
5. Pay the Landlord a Larger Security Deposit
Landlords take a security deposit to make sure they have your money if you cause damage or fail to pay your rent when you leave the property. If you offer to pay a higher deposit, that’s extra security for the landlord.
If you choose this strategy, you should:
- Make sure that it is written into your agreement how you want it to be. For example, if you pay an extra two months’ rent as a deposit, you could ask for this to be used as your rent for the last two months of your rental period.
- Make sure that you can afford the deposit. Will it leave you short on emergency savings?
If you borrow the deposit money from family or friends, remember that they must be repaid. Work out your finances before you offer a higher deposit, and don’t let others down. You’ll find a list of the maximum security deposits that landlords can accept here.
6. Offer to Move in Fast
Empty properties cost landlords some serious money. Every week their apartment remains untenanted is a week of lost rental income. They probably have a mortgage to pay. Then there are the utility bills and property taxes.
Offering to move in immediately could swing the decision your way. Especially if the apartment has been sitting empty and idle for a while.
7. Rent for a Shorter Term
You might offer to rent for a shorter term than the ‘standard’ 12 months. You could call it a trial, to help the landlord build trust in you as their tenant.
With a shorter three-month or six-month rental term, the landlord takes on less risk. You get the chance to prove that you are a good tenant who looks after the apartment and never misses a rental payment. When it comes to the end of the lease, the landlord will be more likely to renew.
A variation is to ask for a month-to-month lease agreement. This is more flexible for both you and the landlord, though they may ask for higher rent because of the possibility of you leaving in short notice.
8. Don’t Forget References
It’s probable that the landlord will request references from your employer and, if you have rented before, your previous landlord. If you’re a student, ask for references from professors, tutors and college administrators.
If you can, ask for written references that you can take with you when you meet the landlord. This may help the landlord make a faster decision to rent to you.
9. Rent from an Independent Landlord
Property management companies and condominium companies are likely to have rigid rules about who they rent to. Independent landlords are generally more flexible. They are more likely to let your lack of credit history slide, if you employ some of the strategies discussed above.
Go and Get That Dream Apartment!
Don’t get discouraged by a landlord rejecting your application. What do they know? You know that you will make a good, reliable tenant. There are always more apartments to rent.
Whatever the reason for having no credit history, don’t let it stop you. Now you know how to get an apartment with no credit history, you are ready to secure your dream apartment.
To overcome the negative biases of landlords, remain positive and use one or more of the above strategies that remove the landlord’s fear of renting to a tenant with no credit history. You’ll soon be walking into your own home – and that’s a great feeling.