Trying to Rent with Zero or Bad Credit
Trying to Rent with Zero or Bad Credit

Renting with friends is an exciting stage in life, but it can be a challenge if you are a first-time tenant or have bad credit. Landlords are looking for the best candidate possible for their property, and most will carry out a credit check on potential tenants. Unfortunately for first timers, having no credit history is often viewed on par with a bad credit history. This is because it is difficult for landlords to assess whether you pose a financial risk.

Having no credit history or a black mark against your name could lead to you being overlooked by owners, meaning you may struggle to find a rental. But don’t worry, there are a few things you can do to improve your appeal.

Move into a share house - Even if it’s only for a short period, this will help you prove that you are a good tenant and can be relied upon to pay rent on time consistently. To benefit from this arrangement, though, you’ll need to make sure that you officially sign onto the lease as a co-tenant.

Get a roommate - If possible, try and get a property with a roommate who has a solid rental record. If one of you has a strong rental background, it will help convince a landlord that you are less of a liability. It is even better if your roommate is willing to sign the contract for a property solo and put you on the lease as a co-tenant at a later date.

Create a financial buffer - If you have the funds, offering to pay extra rent up front will help alleviate a landlord’s concerns you will miss rent. Tenants are commonly asked to pay one month rent in advance. Try offering six to eight weeks to create a bigger safety net. This will be beneficial for prospective tenants with a bad credit history.

Character references - A glowing reference can go a long way. It is best to submit at least two strong letters of recommendation with your rental application, attesting to your trustworthiness. Make sure the references are from a valid source, such as an employer or community leader, as a nice letter from Mum and Dad is unlikely to make an impact.

Get a guarantor - Talking of parents and relatives, check if they are willing to co-sign your lease or guarantee all your rental payments. This is common if you are moving out of home. It allows your parents to offer a helping hand, without infringing on your independence. This will also reassure the landlord that the rent will be paid, regardless of what happens. Your guarantor will need to sign a contract. This guarantee often also includes a promise to cover any outstanding cleaning costs or damage at the end of the lease.

Raise the stakes - If you are struggling to get a rental, as a last resort, offer to pay a slightly higher amount of rent. As long as it is within your budget, you can add an extra $10 to $20 per week to the rental fee. On a weekly basis, it is a fairly minimal change, but over a year it will add between $520 to $1040 in rent revenue. This added bonus will be a very attractive offer to a landlord and difficult to pass up.

Location - If you are renting for the first time with no credit or bad credit, where you want to live will play a major role in determining the success of your search. In competitive rental markets you will face more difficulty getting a house. So, perhaps look further afield to improve your chances. Once you get a good rental history, it will be easier to move back into the suburbs you initially had set your heart on.

Clear your debts - Whether you like it or not, your landlord is likely to investigate your credit history to make sure that you are going to be a reliable tenant. It is best to pay any outstanding debts before making a rental application. If you cannot square everything you owe, try getting a personal loan and consolidating debts, which looks less alarming on paper. Phone bills and credit cards should be among the first to be paid off. But be wary of predatory lenders that offer low level loans to get you back in the black, as these often charge very high interest payments, and, if you fail to pay, you will have another black mark against your name.

Move on from your past - Sometimes a bad credit history is the result of issues out of your control, such as losing your job. Handing over proof of income, along with a letter of recommendation from your employer, will go a long way towards proving your reliability if your circumstances have changed. If you have turned your credit situation around, it also pays to submit bank statements showing personal savings.

Would you like some more tips on how to improve your rental credit appeal? Send me a message HERE, and I can send through some information.

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Trying to Rent with Zero or Bad Credit