A good credit score can be the key to accessing many things in life, from better rates on loans to higher credit limits and even apartments. A low credit score or minimal credit history could leave you with more locked doors than keys. While it’s possible to get an apartment with no or low credit, having a strong score will make the process much easier.
How Does Your Credit Score Affect Your Ability to Rent?
“Credit scores are a key component of a landlord’s scoring model, which predicts a prospective renter’s willingness and ability to pay rent,” says Brian Zrimsek, industry principal at MRI Software, a property technology firm. “Different landlords use different credit bureaus, and the threshold for acceptable scores may also vary by region and property type.”
Many landlords will conduct a credit check at the beginning of the rental process, he says.
“Credit ratings may also be used to offer priority to applicants with higher ratings, or to extract concessions from applicants with lower credit,” such as paying an extra month’s rent upfront, says Chris Motola, a credit analyst at MerchantMaverick.com.
[READ: Best Credit Cards for No Credit.]
Why Do Landlords Require Credit Checks to Rent an Apartment?
“Landlords use credit checks for the same reason as lenders: to try to gauge the likelihood that the applicant will pay the monthly obligations on time,” Motola says.
Landlords’ finances may depend on their tenants’ timeliness in paying their rents. If too many tenants default on their rent payments, landlords could have trouble covering their own expenses, including mortgage payments.
“Credit checks are, in effect, a form of risk management. Past behavior is the best indicator of future behavior,” Zrimsek says. “They are a tried-and-true method of determining whether prospective renters have a history of responsible credit usage and if they can handle the cost burden of rent, which is probably their largest expense.”
Not all landlords require credit checks, however. Often, it depends on the landlord’s renting strategy and market conditions, such as how hard it is to fill vacancies, Motola says.
[Read: Best Secured Credit Cards.]
How to Get an Apartment With Low or No Credit
If you have poor or no credit, there are ways you can improve your chances of getting approved for an apartment, such as the following:
1. Negotiate. Motola says you can always try to negotiate with a landlord, especially if you can demonstrate a track record of timely rent payments. That said, you’ll probably have a better shot at success if you’re working with an individual, rather than a large apartment complex.
2. Pay an additional month’s rent upfront. If you can afford to pay another month in advance, landlords may be more amenable to renting to you, even if your credit history isn’t up to par.
3. Focus on proof of income. If your income is stable and high enough to cover the rent and then some, the landlord may be willing to forgive a credit score that falls short.
4. Get a letter of reference. Providing a personal letter of reference from a previous landlord attesting to your history of paying your rent on time is another strategy that can help.
5. Find a guarantor or co-signer. While this is more common in student housing where parents are responsible for paying the rent, Zrimsek says you may be able to add a guarantor or co-signer with better credit to your lease to compensate for your lower credit.
[Read: Best Credit Cards for Bad Credit.]
How to Strengthen Your Credit
Even if you’re able to get an apartment with low or no credit, it’s worth your while to strengthen your credit score so you don’t have to face so many barriers in the future.
One way to boost your credit is to have your rent payments reported to the credit bureaus. If you do this, make sure you pay on time every month. Late payments can otherwise hurt your score. “That is an excellent way to build credit — simply by paying your rent on time,” Zrimsek says. Ask your landlord if they report your payments, or look into rent reporting services on your own.
To strengthen your credit, you can also:
— Use credit cards responsibly. Get a credit card, and pay it off on time. If your credit is too low, you may need to start with a secured credit card.
— Use a secured credit card. With secured credit cards, you deposit money to serve as collateral. Typically, the deposit amount will be equal to your credit limit. You can build up a credit history with on-time payments until your credit score is high enough to qualify for a traditional credit card.
— Watch your credit utilization. Your credit utilization is the percentage of your available credit that you use. “Even if you’re keeping up with your debt, you can lose some points for using too much of what you have,” Motola says. Experts generally recommend keeping your utilization below 30%.
— Use credit-boosting services. Services like Experian Boost let you factor timely payments such as your internet or phone bill into your credit score, Zrimsek says.
How to Spot Apartment Scams
Shopping for apartments that don’t require credit checks can open the door to scams. Scams can take a couple forms: Scammers may take a legitimate rental listing but change the contact information to their own to get you to give them your information, or they may fabricate an entire posting for a fake rental to lure you in.
“Generally speaking, a good rule of thumb is to use reputable internet listing services,” Zrimsek says. “Take listings on Craigslist or Facebook with a grain of salt, and always visit a unit in person.”
If you are considering a unit owned by an individual landlord, Zrimsek says to perform your own due diligence. Try to verify who owns the building, and see if you can find information on the landlord. “If the information is nonexistent or negative, then steer clear,” he says.
The Federal Trade Commission warns of the following red flags:
— Asking you to wire money
— Asking for payment before you’ve signed a lease
— Claiming to be out of the country
One of the biggest signs you’ve stumbled on an apartment scam is if the person listing it tries to jump ahead in the process, Motola says. “For example, if the Realtor asks you to sign something before seeing the apartment,” or “to put money down before signing a lease.”
Note that landlords can charge application fees for conducting credit checks before you sign a lease. This amount may be capped based on where the apartment is located.
If you think you’ve become the target of a rental scam, the FTC says to report it to your local law enforcement agency and the FTC as well as alert the website where the fraudulent ad was posted.
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Can You Get an Apartment Without a Credit Check? originally appeared on usnews.com