for smart Renters
Dealing with your bad credit...
Strategies for handling bad credit
Let’s say your credit is really bad. Terrible. Awful. And you need to rent an apartment. What do you do?
Here’s what you need to know from the landlord’s point of view: Once they sign a lease with you, you’re in control. If you never paid them another penny in rent, you could probably live in their apartment for six months without paying rent. Meanwhile, they have to hire an attorney to represent them in landlord-tenant court (while you can represent yourself “pro-se” or by yourself, and you can take advantage of free legal counsel available at the courthouse for tenants. It’s a lengthy, expensive, and infuriating process for a landlord. It doesn’t take too many nonpaying tenants to force a landlord out of business.
As a result of the Alice-in-Wonderland process, landlord’s want to be sure that their tenants can pay the rent. A vacant apartment is preferable for a landlord than an occupied apartment with a tenant who isn’t paying the rent.
So here are some time-tested tips you can use to secure an apartment. You may need to use one or more of these techniques:
1.Offer to prepay a year’s rent - If you prepay the rent, the landlord is not at risk of you not paying. Problem solved. What? You can’t afford a year’s rent in advance? Then offer as much as you can. Say 9 months of rent in advance. Can’t do 9 months? Then offer 6, or 3 months. Two months of prepaid rent probably won’t solve your problem.
2.Offer additional Security - Many landlords will be receptive to additional security. Again, offer as much as you can afford to offer. If your credit is bad, offer 6 months of security, or 4 months of security. If your credit is just a little weak, but not too bad, you might be able to satisfy the landlord with an offer of 2 months of security.
3.If you are applying for a rent stabilized apartment, the landlord is prohibited, by law, from asking for more than one month’s rent. But don’t let that stop you. There is nothing that says a rent stabilized landlord can’t accept the last 2 or 3 months of prepaid rent.
4.Find a guarantor - A guarantor is someone who agrees to pay the rent in the event that you fail to pay the rent. The easiest guarantor to find is usually a parent or relative, but it doesn’t have to be. It can be a business associate or a friend of the family.
The main thing to understand about a guarantor is that the guarantor has to have good credit and earn considerably more than necessary to rent the apartment. The reason is that the guarantor has to be able to comfortably afford to support their own house-hold in addition to your apartment if you fail to pay the rent.
The guarantor will be asked to submit an application form, documents to verify their income, submit to a credit report, and be asked to sign the lease in the “Guarantee” section of the lease.
Most landlords only want one guarantor for a lease. So if you have roommates, the most financially qualified parent ought to be the guarantor. The other parents can guarantee their child’s portion of the rent to the guarantor.
5. Find a qualified renter to share your apartment, and let your roommate be the person to sign the lease. By law, if you rent a rent stabilized apartment, the tenant is allowed to have one person live with them who is not on the lease. That person can be you. Let your roommate apply for the apartment. After the lease is signed, the new tenant, your roommate, can inform the landlord, in writing, that he/she intends to have another person live in the apartment with them. The landlord has a right to know who the person is, and has the right to ask the that the roommate fill out an application form. However, the landlord doesn’t have the right to turn that person down.
Sometimes, bad credit is the result of temporary forces that were beyond your control.
When this is the case, your best tactic is to have a letter prepared (keep several copies of it to give to each landlord you apply to) explaining to the landlord that your credit was ruined by an external event, but that you are now doing everything to correct and clean up the situation.
For example; you might have had your credit ruined because of a lengthy illness that kept you from working for many months, or you had huge hospital and doctor bills that you could not pay immediately. But you can go on to explain that you have worked out payment arrangements and that you are making regular monthly payments until the debt if settled and your credit can be restored.
Or you might have lost your job and been unable to find a suitable job for your skill in a reasonable time. Again, you should go on to state that the problem is now solved, you have a job, and you are paying back your creditors.
Whatever the nature of your personal situation, a well written letter to the landlord explaining why you got into trouble, and what you’ve done to make up for the situation will go a very long way towards restoring your ability to rent an apartment.
And as long as you’re writing a letter to the landlord, make sure it is well written and it should be printed from a computer to ensure that it can be easily read and that you can print more copies of the letter if you need more copies.
TIP: If you have determined that your best course of action is to offer to prepay rent or offer additional security, then offer it - up front - in your cover letter to the landlord.
Don’t wait until you are turned down to make the offer. It may be too late then. There may have been an other applicant who is stronger on paper. Once you have been turned down, the landlord may not want to second guess themselves. Besides, they will wonder why you didn’t make that offer at the beginning. So don’t wait. Make the offer to prepay some rent or pay additional security at the time you make your application.