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Summary: Renting out a house to someone with bad credit is still possible after speaking with his or her references, past employers and by asking for a larger up-front deposit. Avoid disqualifying potential tenants because of credit scores alone with helpful information from an experienced real estate agent in this free video on renting a home.
James Kurkela, together with his wife Judy Kurkela, are licensed real estate agents who have been serving Putnam, Westchester, Orange and Dutchess counties for more than 20 years....read more
"So let's say that you have found someone that you would like to rent to and you've run their credit. You've found out that they, in fact, don't have good credit. There's a lot of reasons for this in today's market, I mean, people have lost their jobs and therefore they've had to default on their loans, their home, their credit cards, etcetera. I would not necessarily disqualify them as a candidate. I would look beyond that. First I would talk to their past employers to see what kind of individuals they were. I would also talk to their references. They're probably going to provide you with family references, friends, etcetera. And I would find out why they had their credit problems. What exactly occurred? It may again be that they just incurred too much debt and they came to a point where they couldn't pay it all, but now they may, in fact, have cash flow, which enables them to pay the rental that you're looking to to to take in on your property. Another thing you can do after you investigate their references and understand why they're in this credit situation is just ask them if they would, in fact, put up more of a deposit up front. So normally, with someone with good credit, you might take a one month deposit, someone with bad credit, you may say "I require one and a half or two month deposit up front." That's how I would pretty much handle somebody who's in that situation today because you're going to find there's a lot of people in that situation today."
eHow Article: Renting a House With Bad Credit
Meet Mark P Cussen, CFP, CMFC eHow's Personal Finance Expert.