“I have bad credit and I need to rent a house.” This is one of the many dilemmas that countless people face these days.
Whether you’re moving to a new home within the city or relocating to a different state, the process of renting a house can be complicated. Things are made more difficult if you have bad credit or eviction history. Fortunately, there are things you can do to increase your chances of securing approval, and that’s what we’ll talk about below. Let’s dive in!
What are the Effects of Bad Credit and Eviction History on Your Tenancy Application?
With bad credit and eviction records, it’s hard to find housing for rent, especially those that actually look at your records and history. You may experience a grueling screening process, and you’ll be asked to pay a higher security deposit.
How do you know you stand at a disadvantage? One is if you have a FICO score that’s below 670. The common causes of bad credit scores are:
- Late payments
- Missed payments
- Charged off accounts (extremely delinquent account that creditors believe are no longer collectible)
- Collection accounts
- Bankruptcy
- Home foreclosure
- Court judgments
- High or maxed out credit cards
Meanwhile, if you’ve been evicted due to any of the below reasons, it also affects your chances of renting a house. An eviction happens when a landlord issues a notice, requiring the forceful exit of a tenant. This could happen for a number of reasons, including:
- Breaches to the lease agreement
- Health or safety violations
- Landlord plans to move into the rental property
- Landlord plans to take the rental property off the market
The actual eviction information will not appear on your credit report but the subsequent consequences related to it, will.
- Collections. If you have unpaid rent and your landlord has tapped the services of a collection agency, the collection account will show up on your credit report.
- Court Judgments. If the landlord sued you for unpaid debt and he wins, a court judgment will be issued. This will appear on your credit report between 30 and 60 days after the court judgment was issued.
What are the Landlords' Standard Screening Processes?
Landlords want to reduce the risk on their part when accepting new tenants that’s why they follow a standard screening process. They want to know your credit standing, your rental history, and if there’s a criminal record.
Even so, the screening process may vary among landlords. Some follow strict screening guidelines while others approve tenancy applications without conducting any credit or rental history check.
Background checks may involve the following:
- Obtaining tenant credit reports from the National Association of Independent Landlords
- Seeking out tenant screening services for credit reports containing relevant background information, such as evictions, collections, and bankruptcies
Taking out a credit screening product from any of the three credit bureaus: Equifax’s resident and tenant screening, TransUnion SmartMove, Experian’s RentBureau
Can You Rent A House With No Credit Check?
If you’re wondering if you can skip the credit check process and still get approved for a rental house, that’s possible. Even though it will be more difficult to secure a tenancy approval, you can still find rental homes with no credit check.
Here’s what you can do:
- Look for a landlord who has a lot of vacant rental units. You can use the low rental demand to your advantage by offering to move in right away. Landlords bleed money whenever they have empty rental units for a long time and they may consider approving your tenancy application even if you have no credit.
- Offer to pay rent for at least three months in advance.
- Offer reference letters from your past or current employer.
- Present a copy of your proof of income as evidence of your capacity to pay.
- Ask a relative or a close friend with good credit standing to cosign for you. (new bullet point) Pay off your debts the best you can, including outstanding loans such as a title loan to help lower your credit utilization.
Where and How to Check Your Credit History?
Knowing what’s in your credit history can help you gauge where you stand so that you can take proper measures to improve your situation. Your credit history affects your financial situation and decisions in many ways. Your credit report includes information like your credit score, the number of credit cards or loans you have, if you have missed or have late payments, have filed for bankruptcy, or if you’ve been issued court judgments.
According to the Fair Credit Reporting Act (FCRA), you can request a copy of your annual credit report from the three credit reporting agencies one at a time or at the same time. You’re entitled to one free copy a year. You can get up to six free copies from Experian. If you need additional reports within the 12-month period, you can buy one for no more than $12.50 each.
Here’s how you can request a free credit report:
- Online: Visit http://www.annualcreditreport.com/
- Phone: Call 1-877-322-8228
- Mail: Fill out the Annual Credit Report Request Form and send it to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.
Why Should You Ask for Your Credit Report?
Landlords often perform a credit check on those who apply for tenancy. So, before you submit an application, it’s best to know what your credit report contains to avoid surprises down the road. It will also give you time to fix any errors that may derail your tenancy approval.
How to Fix Errors in Your Credit Report
You need to improve your credit score to make it easier to secure a house for rent. Sometimes, there are items that are incorrectly recorded on your credit history, so you need to look into it too. You can dispute errors on your credit report and increase your credit score.
Get in touch with the credit reporting company, as well as the information provider, and request to correct any inaccuracy in your report. Make sure to submit all the necessary documents to support your claim.
Your request will be processed within 30 days. If the results of the investigation prove that there are errors in your report, the information provider will notify all three credit bureaus so changes can be made.
Where Can I Find My Eviction Record?
An eviction will negatively affect your credit standing and affect your ability to secure a tenancy approval in the future. If there is an incorrect eviction or judgment on your credit report, you have to file a dispute with the credit bureaus immediately.
An eviction record may appear on the following:
- Rental reporting bureaus (Experian’s RentBureau, TransUnion SmartMove, Equifax’s resident and tenant screening)
- The rental history from companies that offer private tenant screening services
- Public records
You can proactively check these sources before submitting a tenancy application. It’s better to be prepared first before seeking out a rental unit than to be dismayed in the end because your tenancy application got declined due to errors that you could have fixed.
How to Get an Eviction Erased From Your Record
Disputing an eviction and having it removed from your record is difficult, but that doesn’t mean it can’t be done. Here’s what you can do:
1. Talk to the landlord and deal with any unpaid debt in exchange for a notarized statement about the settlement.
2. Prepare all the documents needed to have your eviction expunged from public records. These include the following:
- Notarized statement from the landlord
- Credit dispute letter
- Credit report
- Other documents supporting your claim
3. Ask the court to expunge your eviction record.
4. Win the case by providing reasons and evidence of inaccuracies, inconsistencies, unfairness, or even the legality of the eviction.
5. Once you’ve got your eviction record expunged from public records, inform the credit bureaus and have the eviction-related information removed from your credit report.
Can You Increase Your Chances of Getting the Tenancy Despite Having Bad Credit and Eviction History?
There are things you can do to increase your chances of getting the tenancy even if you have bad credit or eviction history. Here are some tips on how to convince a landlord to rent to you with bad credit:
- Give the landlord a sense of security by offering to pay a higher security deposit or at least two months’ rent upfront.
- Give the property manager some assurance that you have the finances to pay by showing them your proof of income.
- Ask a close relative or friend with good credit standing to be a cosigner in your lease.
- Provide recommendation letters from employers or previous landlords.
- Look for rental units with no credit check.
- Improve your credit standing before a tenancy application
How to Repair Your Credit Score
Having a bad credit score can be inconvenient especially when you are trying to find a new home. Fortunately, there are things you can do to improve your credit standing.
- Your payment history accounts for 30% of your credit score. So, you should always pay your bills on time.
- Your debt takes up 30% of your score. Be sure to settle your debt, whether it’s with your previous landlord, mortgage, or credit card company.
- Stop applying for new credit if you don’t need it. New credit applications trigger hard inquiries that could negatively affect your credit score.
- Use a secured credit card.
- Dispute any errors in your credit report.
Where else can you turn to for help when you have bad credit and need to rent a home? Work with a financial counselor who can give you expert advice on how to fix your credit score. You can find free credit counseling from organizations or governments, such as the NFCC.
Conclusion
Moving to a new home is an exciting experience if everything goes according to plan. But if you are one of those who have bad credit and an eviction history, renting a house becomes more complicated. But don’t fret. You can make a tenancy application a bit easier if you find yourself in this kind of situation. So before you rent a house, check your credit and rental history first. That will allow you to fix errors or rebuild your credit standing in case you have a poor credit rating. You can also pay a bigger security deposit, present recommendation letters, or look for rental homes with no credit check.
Have you been trying to find a home to rent despite a bad credit or eviction history? Share with us how it’s been with you in the comments below.
Aidan has been writing about personal finance for over 6 years. Prior to this, he worked as a Corporate Finance Analyst where he specialized in Due Diligence, Company Valuations and more. He is a CFA charterholder.
