How Your Credit Score can Affect Apartment Renting

You have worked your whole life maintaining your perfect credit, then all of a sudden you lose your job.  No matter how you try and what things you sell, you just could not save your credit.  Before long they are repossessing your home and your car and you have absolutely no where to call home.  The only choice that remains is to rent an apartment, but even there you have nothing but shut doors and no one wants to help you due to your credit rating or FICO score.

It never dawned on you that you would ever lose your job much less your credit,  so now what can be done?  Is there a way to rent a home with bad credit and if so do you have to live in the "dumps?"

Looking for a new home:

Before you even go out the door to look for a new home, get all your ducks in a row.  It is absolutely fruitless to begin a home search until you have a few things done and prepared.  First it is imperative that you get a credit report and have it ready.  There are many places on the Internet that offer a free credit report once a year.  Here is a link for Trans Union:

Free Credit Report

Now that you have your credit report you can search and see where the main points of discrepancy lie.  Try to alleviate as much as you can before house searching.  Many collection agencies will agree to negotiate the amount owed and in exchange will wipe the debt off your credit report.  If they will not agree to that then have them make an immediate report that the account has been rectified.  You can also put letters on file with the credit bureau explaining exactly what happen.

Once you have corrected your credit report as much as possible, take the credit report with you when you begin house hunting.  It is important to be honest and upfront with the people who are considering renting to you.  Stay away from the big complexes and look for a smaller unit or home that is owned by an individual.  Many management companies have set policies on credit and ratios.
Some apartment and home managers will also go by the LTV (loan to debt  ratio).  This is the debt to rental ratio.  So they will consider your monthly rental compared to your income.  The normal ratios will be 30-36% of your income after debts are deducted.  So when considering a home for rent keep these ratios in mind. 

Credit Report and 7 Years of Misery:
Keep in mind that the bad marks will be on your credit for seven years and ten years if you file bankruptcy.  During this period you will not be able to buy a home or a car.  What you can do is try to reestablish some good credit to show potential landlords that you are a good risk such as taking out a fully secured loan through a savings and loan.  This is a normal procedures to begin establishing credit.  Look for a secured credit card also as a second choice or a account with a small department store, such as Mervyns.

Do not give up as there are many places that will work with you if you are honest, sociable and are dressed well.  Funny how people judge you by your appearance.  A manager would much rather you be upfront with them, then to find out you lied after the new credit report comes in.  Sometimes they will not pull a new credit report if your report is recent.

Property Managers: How to Avoid Being Stuck with Bad Renters

There are some basic rules when it comes to leasing or renting out your property. All landlords are looking for the magic key to avoid getting bad tenants and sometimes even the best of you get fooled. When looking for good tenants follow these simple guidelines and hopefully you will never have to worry again:

1. Hire a Realtor or Broker to rent your apartments out. The Broker will place a sign in your yard, indicating the home is being managed by business class people not "Mom and Pop" owners. You would be surprised how this one sign can turn many potential bad renters away. It seems like bad renters avoid any type of rigorous checking. They can con the best of you and so by spending a little money, you save yourself some problems.

The Broker's job is to run a credit report, take a full application on the prospective tenants, notarize the lease agreements and check the job and references out. The Broker is being paid to protect you and in most cases the Broker will bring you the best tenants. A Normal fee to hire a Broker to rent out your unit is 50 percent of the rent, but this is negotiable. 

2. Look at the person and the references very closely. Many people are able to con even the best person, so look at them very closely. Notice the clothes they wear, their shoes, their jewelry especially and also the references. A person who uses a doctor or lawyer for a reference is better qualified than a man who uses a man who works at a burger joint.

3. Look at the rent to debt ratios. The bank looks at a ratio of 28-33%. If the prospective tenant has problems with his credit report and has high rent to debt ratio, this is a red flag. Of course there are always reasons why a person is in default or has collections, but listen to the explanations thoroughly and question why they have not bothered to correct their credit report.

Correcting your credit report is not that difficult. There are many agencies that correct credit reports for a fairly reasonable fee. The tenant themself can dispute credit defaults. If the tenant shows no intention of trying to correct his collections or defaults, refuse the tenant. Feeling sorry for someone can lead you right to the "Poor House."

4. A really simple thing to do is to run an Internet check on the person's names. If his name is Tom Jones, google Tom Jones and see if you see anything suspicious on him. The Internet has more information than most people can imagine.

5. Make sure if you hire a Realtor, that the Realtor checks prior residences. Talking to the prior landlord is a good thing to do. Sometimes the prior landlord will cover for the person, but many times they do give hints and warnings to watch out for.

In the end, talk to the tenant one on one and look at their eye contact. Look for well kept clothing, polished shoes, children being kept very tidy, etc. These things can appear to be minor, but in the end it is all you have to go on. Gut feeling sometimes will give you more insight into a person's character than a three page application.