How to rent good housing in the USA if you have a bad credit history or none at all

A bad credit history can ruin your life. It's not easy, but there are still ways to rent a decent apartment if you have a low credit score. Lifehacker.

Photo: IStock

There was a time when, in order to rent an apartment, you had to walk around for several minutes, decide that you need it, then sign a lease and pay a deposit. Those days came to an end when the concept of a credit score emerged in the late 1980s.

Originally designed to help financial institutions assess credit risk, credit scores have metastasized into almost every aspect of our lives. A bad credit score (typically below 600-650, although this number can be higher in competitive rental markets) will negatively affect your chances of getting not only a loan, but also a job and even a house.

This creates a grim vicious circle for those with bad credit: You can't get a job or an apartment because you have bad credit, and you can't improve your credit because you can't get a job or an apartment. If you find yourself struggling to rent a decent place to live, but due to poor financial decisions made in the past, you can't - don't despair.

pay more

The old adage that being poor is expensive applies in this situation, because one of the most effective ways to convince a landlord that you're a good fit despite bad credit is to offer them more money in the form of higher collateral. Some states limit landlords to a certain amount (usually 1-2 months' rent), while some states allow more, and some, like Colorado, have no limit at all. Whatever state you live in, you can allay your landlord's concerns by offering more cash, and if you're a responsible tenant, you'll get that money back when you move out.

If that's not enough, you can suggest a few other things:

• If possible, make an advance payment in addition to the deposit. An offer to the landlord of rent several months in advance will be very convincing.
• Offer to set up automatic payments. The landlord's fears can be allayed if he knows that he will not have to beat a check out of you every month.

Co-borrowers, roommates and referrals

Another strategy requires the help of other people. If you know someone with a higher credit score who is willing to take on the responsibility, hiring a guarantor can help. Just like when you take out a loan, the rent guarantor legally agrees to pay the rent if you don't. He offers the landlord a safety net in case you end up as poor as they can fear.

Be careful and prudent when trying to convince someone to become your surety - if you don't pay your rent due to circumstances beyond your control, they will have to pay the bills.

Another people-centric solution: roommates. If you know someone who needs an apartment who has a better rating than you, it could be the main name on the lease. Keep in mind that they will be in the same situation as guarantors: if you do not pay rent, they will have to pay your share.

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Finally, if none of these options work, you can try offering your potential landlord a few suggestions. The best references will come from former landlords praising you and noting how consistently you pay your rent. If you can show a new landlord that you've never missed a monthly payment in your entire life—and that your former landlords love you enough to write a letter to that effect—they may want to ignore a disappointing credit score.

Show paper trail

The reason a landlord doesn't want to rent you an apartment is because of your credit history. But many people have good incomes and even savings despite having a bad credit history - after all, this history could be the result of identity theft, a few missed payments, or just some bad decisions you made a few years ago.

One way to overcome this is to show your landlord proof of your financial security:

• Pay stubs from your job (a note from your boss would be nice too).
• Bank statements and paid utility bills.

Basically, you're trying to convince them that your credit score is only part of your financial history, so the longer the trail you show them, the better.

Rent from owner

In addition, you can look for apartments that do not require a credit check. Typically, this means looking for "rent-by-owner" apartments, which you would normally find in private homes. These will be basement apartments, mother-in-law apartments, or similar stand-alone units rented out by people looking for a little extra income. Platforms like Airbnb have reduced the number of these apartments on the market, but they still exist.

While some of these apartments can be amazingly beautiful, there are a few caveats to keep in mind:

• Legality. One of the reasons why a landlord may refuse some documents may be the legal status of the apartment. If it's an illegal apartment, it may not pass security checks, so you should do your due diligence before renting it.
• Fraud. These days, anything that seems like a financial workaround could very well be a scam. Predators know that people with bad credit are desperate to find an apartment, so offering housing without a credit check is a great way to collect a security deposit and then scam you. Don't let yourself be pressured into handing over money until you've actually checked everything.

If none of these strategies work for you, you can try one last gambit: talk to your potential landlord. Sometimes a conversation with another person is all it takes to overcome an obstacle.

There are no guarantees, but if you explain your circumstances and ask a potential landlord for a little help, simple human decency can work and save you.

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