How does bad credit affect renting an apartment?

Written by w d adkins
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Poor credit presents serious financial challenges, and renting an apartment may be one of them. However, there's a lot you can do to reduce the effect of bad credit on your ability to rent an apartment. Some landlords don't check credit (in which case your credit rating has no effect), but this can be a mixed blessing. If the landlord is an individual (renting a converted basement, for example), this may be fine. But many such apartments are in less-than-desirable areas. At the other extreme, poor credit may cause landlords renting high-end luxury apartments to turn down your application. Most landlords will rent to people with bad credit, provided there are some other factors in your favour that make you an acceptable risk.

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Tenant Checking

To see how bad credit affects renting an apartment, it helps to understand what happens when you put in an application for an apartment. The application fee most landlords charge goes to pay for a tenant checking service. A tenant check includes your rental history, your credit record and a check of public records to see if you have any serious criminal record. Most landlords are more concerned with your rental history than anything else. They may turn you down if you've had a recent eviction (within three to five years, depending on the landlord's policy) or if you owe back rent. Breaking a lease or failing to give notice you are moving can also result in an application being denied. However, a bad credit rating won't necessarily cause a landlord to disapprove your application. Most often, if you have a record of slow payments or even a bankruptcy, the landlord will ask for a larger deposit on the apartment (a 50 per cent higher deposit is common).

Minimise the Effect of Bad Credit

You can really run into trouble getting approved for an apartment with bad credit when you have obvious problems with rental history as well. When the landlord looks at your credit report, he will see recent activity as well as your long-term use of credit. If the report shows you're current on all your bills, this helps. You can do a lot to clean up your rental credit record by paying off any back rent due and being sure to give your current landlord adequate notice. If there's an eviction or broken lease in your past, be prepared to explain why it happened and be honest about it. If you attempt to hide negative factors, it looks even worse. Be prepared to pay a significantly higher deposit. Finally, keep in mind that time can be your ally. Even if you are turned down now, putting your financial affairs in order and keeping them that way will eventually improve even the worst credit and rental history.

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