Life is a roller-coaster ride. There are times when one struggles financially, resulting in delayed payment of bills and excessive debts. Even if we eventually pay off all the dues, it leaves behind a mark on our credit history. Since credit checks are a common parameter of the tenant screening process, someone with bad credit may think they can’t find a rental apartment.
Additionally, those who are new to the world of adulthood and want to get their first independent living space are faced with a similar challenge. The only difference is that rather than having bad credit, they have no credit history at all because they have no prior record of borrowing.
The good news for individuals falling in both these categories is that acquiring a no credit check apartment might require some extra effort, but is not impossible. A no-credit-check apartment is available for rent without essentially requiring a credit check.
Below are some of the techniques that may help you in this regard.
Tips for successfully renting a “no credit check apartment”
Use a reference
References from your employer, colleagues, or professors who can vouch for your credibility usually have a great impact on the landlord’s decision. Reason being, that such references build the trust level and provide the landlord with some surety that the tenant is not a fraud who will disappear without making the payment.
The strongest reference, however, would be one from your previous landlord. For those renting their first apartment, it would not be possible to provide such a testimonial, but for those who have leased residential properties before and were on good terms with the owner, sharing his/her feedback regarding timely payments and responsible behavior would be quite beneficial in strengthening the application.
Pay a larger security deposit
Security deposit is an advance payment collected by the landlord at the beginning of the tenancy period. It is a protection against any damage that you might cause to their property or a cover for any payment that you might miss. If no deductions are required to be made from it, the security deposit is returned in full at the end of the tenancy.
If you have a bad or no credit history, paying a larger amount as a security deposit will help you obtain a no credit check apartment because much of the surety required by the landlord will be provided via monetary payment.
If you are wondering what exactly is considered a high-security deposit, the answer is, an amount equivalent to 3-4 months of rental payments. The standard security deposit is an advance payment equal to one month’s rent. However, this may vary according to state laws.
Present proof of income
One of the biggest convincing factors for a landlord to rent his/her property without a credit check is the surety that the person they are letting to, has a regular means of income and would therefore have enough resources to pay them.
Hence, submitting copies of your payslips along with bank account records might be a good idea.
Involve a cosigner or a guarantor
Even though these two terms are often used interchangeably, there is a difference between the roles and responsibilities of each, especially when talking about a rental agreement.
Guarantor vs. cosigner
A guarantor is someone who voluntarily promises to make the payment on behalf of the tenant in case s/he defaults. This is similar to the guarantee required by banks when making a loan application.
A cosigner, on the other hand, signs the lease agreement on behalf of the tenant and is therefore fully or partially responsible for making the rent payment.
Whereas a guarantor will only be approached by the landlord when all other means of recovering money from the tenant have failed, a cosigner will be directly and immediately responsible for the payment (even if the tenant does not pay him/her). Under some rental agreements, the cosigner might even be allowed to live in the apartment, but this is not mandatory. However, a guarantor would rarely be given that leverage.
Involving either of the two provides the landlord with additional security and s/he would probably agree to let their apartment without conducting the tenant’s credit check. However, the cosigners/guarantors themselves must have a regular source of income and a good credit score for their assurance to be considered authentic.
Provide evidence that you have enough assets
Credit rating is your past performance concerning dues. What you own currently constitutes your present financial situation. Therefore, many property owners will be convinced if you provide them with proof of their assets. These may include stock options, the amount deposited in your savings account, and recurring deposits.
The greater the number of assets you own, the higher is your chance of getting the apartment.
Offer to move in as soon as possible
Most landlords themselves have mortgages to pay on the property being rented out. Therefore, they prefer tenants who can move in as soon as possible. If you offer to occupy the place immediately, along with the payment of a considerable security deposit, your chances of getting the apartment would increase significantly even if you fail to provide a credit check.
Propose a short-term rental agreement
The usual lease period for residential properties is one year, at the very least. This makes the owners apprehensive of the fact that if the tenant defaults during any month, or makes delayed payments on an ongoing basis, they would not be able to get rid of him/her immediately but would have to bear with the irresponsible behavior till the time the agreement remains valid.
However, when requesting to rent a no-credit-check apartment, the tenant may propose short-term, monthly agreements that may be renewed if the landlord is satisfied. This would give property owners the surety that they would not be stuck with a defaulter for a long time and can replace the tenant whenever they want.
Rent in collaboration with individuals who have a good credit score
Most tenants are looking for properties that would require them to pay the least possible rent. This is understandable, given that almost everyone has budgetary constraints, and wouldn’t mind saving a few dollars. Hence, you can collaborate with individuals who have a good credit ranking and are seeking to rent a residential space within a certain amount.
Sharing a room or an apartment with such tenants would result in a lower cost for both of you because the rent would be divided. An additional benefit that you would get out of this arrangement is that the unavailability of your credit ranking may be compensated by their exceptional score.
However, to avoid any disputes, it is advisable that the two of you mutually decide on details regarding the division of related expenses and the duration for which each one of you would be responsible for the payment. Once you have reached an agreement, it is best to document it and bind it by signing.
Does that mean there is no need to improve your credit score?
Although everyone may need to acquire a no-credit-check apartment at some point in their life, it should only be considered an alternate and temporary solution. Individuals must strive to build on their credit ranking because one cannot always expect third parties (guarantors, cosigners, and references) to come to their rescue. Also, as an adult, it is important to have a record that reflects your financial stability in the long run.
Below are some strategies that may serve as your starting point towards improving your credit score.
How to go about improving your credit ranking?
Find out your credit score
To improve your ranking, you must know where you currently stand. Unfortunately, most people are unaware of their credit scores. The best way to find it out is to contact credit bureaus. They might charge a certain fee but would provide you with an accurate picture of your creditworthiness, exactly as it may be presented to lenders, landlords, or financial institutions you plan to deal with.
Strive for improvement by setting a goal
When aiming to improve your credit ranking, you must research the acceptable score for the type of transaction/application you are planning soon. For example, if the purpose is to avail rental property, it would be beneficial to find out the preferred credit score amongst landlords.
Accessing that information would require some effort on your parts, such as making inquiries from the property dealers in your area, asking friends who have recently rented properties, and having a glance at their lease agreements if possible, to better understand the standard terms and conditions.
Based on what is required from you, you can define a specific goal.
Make timely payments
One of the most important steps towards improving your credit score would be to start making repayments on a timely basis. Skipping the fulfillment of any financial liability would further deteriorate the already low ranking.
Apply for another credit card
An additional credit card may serve as a secured line of credit. Your landlord will have the security that you would be able to make payment via it if other means of income fail. Furthermore, if you repay your transactions via this credit card on time, it would help improve your credit score. The same would be the case if you end up not using the available credit. Hence, there is no downside to getting a second credit card.
Apply for a car loan
One of the smartest hacks that may improve your credit situation faster than other means is acquiring a car loan. Reason being, that this gives out an impression that one has sufficient resources to purchase the vehicle as cars are generally quite expensive. However, you may make the application via a cosigner, just for the sake of getting back on track.
Track your credit
Progress must be monitored to ensure that you are moving towards your goal. It will also help in identifying how far you are from your desired score. Tracking and improvement would serve as a motivation to do better.
A credit check is not an unnecessary parameter used by landlords to trouble the tenants. It is a measure of an individual’s past performance for repayment of loans and financial liabilities, therefore serves as a security for the property owner to remain protected from defaulters. However, if surety can be provided to them via other means mentioned in this article, then acquiring a no credit check apartment is possible.