The bad news is that landlords can — and do — turn prospective tenants away due to poor credit. If you’re reading this, you may even have some first-hand experience being denied an apartment. The good news is that some landlords are willing to forgive certain credit report blemishes and will rent an apartment to you in spite of them.
Learn which past money management mistakes you might be able to explain away and which ones you absolutely must fix as soon as possible if you want a realistic shot at renting your very own place.
First, Look at Your Credit Report
If you’ve been denied an apartment, the landlord is legally required to send to you a written explanation of his or her decision. If the decision was based on your credit report, the letter must include the name of the credit reporting agency and its contact information, so that you may exercise your legal rights to receive a free copy of the credit report upon which the decision to deny you was made.
If have not yet applied for an apartment, you can still obtain free credit reports from all three national credit reporting agencies — TransUnion, Equifax and Experion — at www.annualcreditreport.com. Annual Credit Report.com is the only credit reporting website authorized by all three agencies, and on it you are legally allowed to request one report from each agency each year.
Your credit report or reports will list, in addition to your past and present contact information, all of the loans, utility accounts and credit cards you have ever had in your name. It will also show which accounts are paid up-to-date, which are entirely paid off and which, if any, you’ve defaulted on or at any time failed to make timely payments toward. Last, it will show if you’ve ever filed bankruptcy or been taken to court over a debt you did not pay.
Credit Report Blemishes Landlords May Overlook
Fortunately, some indicators of a questionable credit history may be overlooked by a prospective landlord and, therefore, placed on the back burner as you fix other, more damaging blemishes on your credit report first.
Your own prospective landlord may differ, but when my boss — the landlord — and I discussed tenant applications, there were two types of debt we were almost always willing to disregard: student loans and medical debt.
Students loans actually seemed to boost the credit scores of our applicants, for one thing, even if there had not yet been any payments made toward the debt.
We also knew that applicants who owed directly to the U.S. Department of Education for their student loans would have a pretty easy time getting a deferment, forbearance or reduction for their monthly payment amounts should they find themselves in a financially tight spot. This factor was hugely important to us as we assessed an applicant’s ability to afford the apartment he or she wanted. A landlord’s bottom line on most applicants will nearly always come down to an assurance of monthly rent payments.
As for medical debts, if a person had an otherwise clean credit report but owed medical debts — even if the applicant was behind on payments or had been sent to collections — we often were willing to give him or her the benefit of the doubt.
My boss and I talked about this many times and concluded that our nation’s current health care system is such that a normal, bill-paying, responsible person can easily find themselves in financial ruin overnight due to a single medical emergency. Therefore if an applicant had a history of staying current on all other debts and payments with the single exception of problems paying for healthcare, we would not let medical debt stand in the way of approving an applicant for an apartment.
Credit Report Blemishes You Can and Should Fix Quickly to Rent an Apartment
Landlords are looking for applicants who pay their bills on time, every month. Your recent bill pay history is probably the single most determining factor of your financial suitability as a tenant because it indicates how likely you are to pay rent when it’s due. Whether you make a good salary is irrelevant if you don’t use your money to pay your bills.
If your credit report shows that you have accounts, or even just one account, recently past due, you should get your account or accounts current as soon as possible. This simple correction can get you back in the apartment hunting business in as little as 30 to 60 days.
However, if your credit report shows several months of repeatedly failing to pay your bills on time, simply paying the accounts current unfortunately will not work as quickly to make you look like a suitable tenant. You’ll now need to re-establish a running record of on-time payments. Landlords are more apt to forgive past failures to pay bills on time if your credit report now shows three to six months of being back on track.
Worst of all are old accounts that look as if you simply disregarded them and moved on. I saw this a lot as a property manager, and five-year-old cell phone bills or three-year-old electric bills that went unpaid, and thus probably went to collections, raised large red flags of suspicion on my part.
Occasionally, old accounts that were once in default but have since been paid off may still show up on your credit report erroneously. If this happens to you, you’ll have to get in touch with the account issuer or creditor and work with the company to get the information taken off your credit report. If in fact you do still owe on the old accounts, it is essential that you pay them promptly if you hope to get approved for an apartment.
This may take some considerable effort on your part, especially if your account was sent to collections and your old creditor has washed its hands of you. In the case of an erroneously reported bad account, though, you’ll be able to reapply for the denied apartment as soon as 30 days later.
You can try just as soon in the case of an actual bad debt that you’ve paid off, but landlords may still not be appeased. In that case, follow the advice above about establishing a three- to six-month history of complete and timely bill payments for better luck being approved for an apartment.
Sources:
Annual Credit Report.com
Author Experience in Property Management
