Does Bad Credit Affect Home Renting?
Renting a home is an alternative if you're not ready to buy your own place. Unfortunately, having a bad credit history may adversely impact your ability to rent a home. The key is working with landlords who are flexible and willing to allow tenants with credit issues.
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Credit Checks
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Renting a home will likely involve signing a lease agreement and landlords will hold you to the agreement. If signing a one-year lease on a property, landlords may review your credit report to check for issues such as evictions, foreclosures and late payments. Having this information on your report can impact rental options because some landlords may prefer a tenant with a blemish-free record. These candidates are less likely to breach the contract and terminate the lease agreement early.
Open and Honest
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Disclosing your past credit issues early in the rental process can alleviate problems with trying to find a home. Explain your situation to potential landlords and make your credit issues known. Some credit problems can result from job loss, divorce or being out of work due to illness or sickness. Knowing this information before pulling your credit report can make a landlord sympathetic to your position and approve your rental application.
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Benefits of References
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Being evicted from an apartment or another rental home can harm your chances of getting a new rental with bad credit. But if you have bad credit and have never missed a rent payment, contact your previous landlords and ask them to vouch for you with a reference letter. Seeing your past rental history in writing may persuade a new landlord to consider your application.
Payment Increases
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To compensate for bad credit, a landlord may approve your application if you agree to pay a higher security deposit on the rental home and perhaps a higher monthly rent. Landlords can take the additional money and keep it in a reserve account in case you walk away from the lease early. These funds can help cover the housing expenses until they find a new tenant for the residence.
Joint Tenants
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A bad credit history can also affect whether you're able to qualify for a rental home on your own. Knowing your prior credit history, some landlords may require a second person on the lease agreement -- someone with a good credit history who's equally responsible for the monthly rent.
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