Renting an Apartment with a Low Credit Score

Renting an apartment with a bad credit score can be challenging, but is not impossible. Keep reading for tips on how to get apartments for rent with bad credit.

Renting an apartment with bad credit (500 credit score)

By Janet Berry-Johnson, CPA
Reviewed by Lauren Bringle, AFC®

Life with a low credit score can be challenging. You may have trouble opening a bank account, getting approved for a credit card or loan, or getting a job. You could even have trouble renting an apartment.

If you're wondering how to find apartments for rent with bad credit, our experts are here to help. Bad credit apartments are available, you just have to know where to look. If you don’t know how to get an apartment with bad credit, this guide will tell you everything you need to know. Here's what you need to know about renting an apartment with little or no credit - particularly if your credit score is around 500.

Why does credit matter when renting an apartment?

Can you get an apartment with bad credit or is it impossible? Landlords can look at more than just your three-digit credit score when you authorize them to run a credit check to rent an apartment. For example, a potential landlord who orders a tenant credit check through Experian get access to:

  • Your credit rating and credit score
  • Your name, other names you might use, your current and previous address, and current and former employers
  • A list of your credit accounts with payment histories
  • Potentially negative public records, such as evictions, bankruptcy or foreclosure, and tax liens
  • Credit inquires from the past 24 months
The prospective landlord can use this information from a potential tenant to assess whether they are likely to pay their monthly rent on time and whether they might be a problem tenant.

Can you get an apartment with a credit score of 500?

Before we delve into the minimum credit score to rent an apartment, it’s essential to understand the credit scoring range.

While there are a few credit scoring models (the most well known being FICO and VantageScore), FICO scores are used in more than 90% of all credit decisions. They range from 300 to 850, so when people talk about having “good credit” or “bad credit,” they’re usually talking about the FICO credit score range:

FICO Score Rating Description
<580 Poor People with scores in this range are considered at high risk of delinquency.
580 – 669 Fair People with scores in this range may have a hard time getting credit. If approved, they’ll typically pay a higher interest rate than those with better credit.
670 – 739 Good People with scores in this range are considered acceptable, but they may not receive interest rates as low as those with scores in the higher ranges.
740 – 799 Very Good People with scores in this range are likely to have their credit requests approved and be offered lower interest rates.
800+ Exceptional People with excellent credit scores usually have no problem getting credit.
There’s no universal standard for the minimum credit score needed to rent an apartment, but according to a recent tenant screening study, rental applicants approved in 2017 had an average credit score of 650.

The average credit score of rejected applicants was 538, which is important to keep in mind when filling out your rental application.

How to rent an apartment with bad credit

If you have a fair or poor credit score, there’s hope! There are options for renting an apartment with a bad credit score. And other options for building your credit.

Here are 6 things to do if you have a low credit score and need to rent an apartment.

1 - Be up front about your credit troubles

It might be possible to find a potential landlord who doesn't require a credit check, but be prepared for that credit check anyway.

Rather than wait for the prospective landlord to pull your credit, be honest and up front as soon as you apply. Let your prospective landlord know you've had credit problems in the past, but you're making an effort to improve your credit score.

By discussing the issue head-on, you'll establish yourself as an honest person, and the potential landlord may be more willing to work with you.

2 - Put down a bigger deposit

According to the Zillow Group Consumer Housing Trends Report 2019, 87% of renters pay a security deposit, and the typical security deposit amount is $600.

Landlords may be willing to take a risk on a tenant with bad credit who is willing and able to put down a larger deposit. This can help build trust with the landlord and provide some peace of mind that you have the financial resources to make your rental payments.

3 - Get a cosigner

If you have a friend or family member with a good credit score who is willing to cosign your lease, you may have an easier time getting approved to rent an apartment.

When you have a cosigner, you put their credit at risk if you default on your rental agreement. So make sure you can afford the monthly payments and will be diligent about making them on time.

Otherwise, defaulting on your lease will further damage your credit, as well as the relationship with your cosigner.

4 - Build your credit

If you have some time before you have to move into a rental property (a few months or more), work on building your credit first.

Here are some credit-building resources to help you get started:

5 - Use your income to your advantage

If your income has increased substantially since you had credit problems, show your future landlord paystubs to show that you can afford your payments for the rental property.

Many landlords look at a renter’s debt-to-income ratio (DTI) to determine whether they can afford the rent. DTI is the percentage of your monthly gross income that goes toward paying debts (including rent).

Ideally, property managers like to see a renter with a DTI ratio of 35% or lower.

Calculate your DTI on your own before talking to potential property managers or your future landlord. If you already fall into the 35% ideal, point it out to the landlord. Otherwise, you might need to work on paying down debt or find a cheaper place to rent.

6 - Provide references

Maybe you have poor credit but have always been a model tenant. Ask your former landlord to write a letter of recommendation or provide a reference over the phone.

A good rental history reference from a previous landlord or property owner, along with proof of steady income, can help establish your good character in the landlord or property manager's eyes.

7 - Get a roommate

If you can find a roommate with good credit, have your roommate rent the apartment and then sublease half of the apartment from your roommate.

Or you can move in with someone who already has a place and is looking for a roommate. This keeps your credit score out of the situation entirely.

It might take a little more work to rent an apartment with a 500 credit score or a bad credit history, but you're not out of options. Use some of the suggestions above to find an apartment that meets your needs, even with a poor credit score. Then work on rebuilding your credit so you can lease an apartment easily in the future.

Ready to start building your credit? Get the Self app to get started.

Sources

  1. Insider. "How to rent an apartment with bad credit".https://www.businessinsider.com/personal-finance/how-to-rent-an-apartment-with-bad-credit

  2. The Balance. "Renting an Apartment With Bad Credit". https://www.thebalance.com/how-to-rent-an-apartment-with-bad-credit-960969

  3. In Charge. "Renting with Bad Credit". https://www.incharge.org/debt-relief/credit-counseling/bad-credit/how-to-rent-an-apartment-with-poor-credit/

About the author

Janet Berry-Johnson is a Certified Public Accountant and freelance writer with a background in accounting and insurance. See Janet on Linkedin and Twitter.

About the reviewer

Lauren Bringle is an Accredited Financial Counselor® with Self Financial– a financial technology company with a mission to help people build credit and savings. See Lauren on Linkedin and Twitter.

Editorial Policy

Our goal at Self is to provide readers with current and unbiased information on credit, financial health, and related topics. This content is based on research and other related articles from trusted sources. All content at Self is written by experienced contributors in the finance industry and reviewed by an accredited person(s).

self logo
Written on April 28, 2020
Self is a venture-backed startup that helps people build credit and savings. Comments? Questions? Send us a note at hello@self.inc.

Disclaimer: Self is not providing financial advice. The content presented does not reflect the view of the Issuing Banks and is presented for general education and informational purposes only. Please consult with a qualified professional for financial advice.

Take control of your credit today.

Please enter a valid email.