No matter how financially responsible you are, your old debt can creep back up to haunt you when you go to rent an apartment. Your credit report will show your new landlord any housing-related debts you have incurred. Landlords are particularly reluctant to rent to individuals who left previous housing debts unpaid. After all, if you shirked your rent once, you could do so again. But a little planning and skilled negotiating can help you get approved for a new apartment – even if your rental history is a little tarnished.
Know Your Credit
Unless your prospective landlord subscribes to a database of deadbeat renters that contains your name, your credit history is a landlord's primary method of reviewing your rental history. It's in your best interest to know exactly what's on your credit report before you go apartment hunting. The credit bureaus remove most negative entries after seven years so if your unpaid debt is 7 years old or older, its unlikely that it will stand between you and a new apartment. Even if your credit report is tarnished, that doesn't guarantee a dismal credit score.
You're entitled to a annual free credit report from each credit bureau. You can also purchase your FICO scores directly from the Fair Isaac Corp. at myfico.com. It's a good idea to pull your credit report several months ahead of time. This gives you time to review your report and dispute any errors you find that are dragging down your score.
Explain Your Circumstances
Not all landlords are ogres and not all apartment complexes have approval rules that are written in stone. If your credit report doesn't make mention of your past housing debt, keep your mouth closed and hope for the best. If, however, your past housing issues are front and center, it may be a good idea to explain the circumstances surrounding the debt to the landlord before formally submitting your application. Not all housing debts are a result of carelessness or poor debt management. Perhaps you lost your home to foreclosure after a job loss or maybe the high medical bills you incurred after an extended illness made paying your rent impossible. If your landlord remains unmoved, keep the application fee and put it toward an apartment in a complex more willing to work around your situation.
Lower Risk Level
Any apartment you consider will have a security deposit requirement. Your security deposit covers the landlord's losses in the event you damage the apartment or simply skip out on your last month's rent. Because your past rental history makes you a higher risk for the apartment complex, ask if you can offset that risk by increasing the amount of your security deposit.
You can reduce your landlord's risk even further by offering to let the complex draft your rent payments directly from your bank account. This not only shows the landlord that you're serious about the apartment, it gives the landlord the added security of not having to wait on your payment each month.
Pay Old Debts
Although it may seem like a no-brainer, debtors often leave old debts unpaid. In years past, paying off old debts counted as recent activity on the account. Accounts with recent activity carry greater weight in the FICO scoring formula than old accounts. This is no longer the case. You can safely pay off your old rental debt without worrying that your FICO score will plummet as a result.
Paying off your old housing debt doesn't improve your credit score, but it does look better to prospective landlords who pull your credit. Granted, you're still a higher risk than a renter who never incurred housing debt, but the fact that you paid what you owed – even if that payment was late – speaks volumes for your reliability and may help you get your rental application approved.
- Federal Trade Commission: The Fair Credit Reporting Act (Section 605,612/p.22, 50)
- Privacy Rights Clearinghouse: How Private is My Credit Report?
- Fox Business: How to Rent With Bad Credit
- DailyFinance: 7 Secrets for Finding a Rental After Foreclosure
- MyFICO.com: Credit Q&A – Collections: How to Manage Them and What They Do to Your Credit
- DailyFinance: To Pay Or Not to Pay – How to Handle Old Debts
- Hemera Technologies/AbleStock.com/Getty Images
- Do Apartments Often Accept Co-Signers?
- Importance of Good Credit & Rental Applications
- Consequences of Breaking an Apartment Lease
- How Long Is a Charged Off Credit Card Bill on a Credit Report?
- Requirements to Rent an Apartment
- Will Not Paying Rent Affect a Credit Score?
- Will Breaking Your Apartment Lease Affect Your Credit Score?
- Can I Rent Without a Co-Signer?