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How to Rent a House with No Credit
With so many people defaulting on mortgages, the demand for rental homes is at an all time high. However, it can be just as difficult to rent a home with no credit as it is to buy a house under the same circumstances. Most landlords require a credit check in order to secure a lease or rental agreement. If you have no credit, you can still get into a home if you follow a few simple steps and pay attention to some details.
No Credit or Poor Credit?
Most people aren't exactly sure as to what the definition of these terms is. No credit implies that you have no financial records to refer to. Either you are a young adult just going out on your own, or you have never had any accounts that use credit, such as a bank issued credit card, store card or auto loan.
Most people are not in this situation. Even small accounts lead to a credit history, either good or bad, depending on how you have handled your finances. This information should show up when a potential landlord looks up your information.
Most people fall into the category of having poor credit. Poor credit is created when you do have financial accounts that have had problems, either recently, or in the past. If you have missed a credit card payment, this will show up on your report as a negative mark.
Having more serious problems, such as a repossession or foreclosure, gives a worse impression. This is what most people deal with when they are struggling to rent a house. Landlords see poor credit as an indication that you may be less than responsible and not an ideal candidate for their rental property.
Gather Your Information
The first thing to do when you want to rent a house with no credit is to gather your financial and personal information. Even if you have no credit, or a poor rating, you can make a positive impression on the landlord or property manager by showing them a history of responsibility.
This basic paperwork should include:
Your landlord will want to know that you have a steady job and that you can afford to pay the proposed rental amount that is being asked. The first two items are the most important things that you will need to show to demonstrate that you can handle the contract. The last two are your ticket to show that you are trustworthy and likely to hold up your end of the rental agreement.
Be sure to ask your references for their support to avoid surprises when the landlord checks. You don't want to refer them to anyone who will give you a less than stellar opinion. Obviously, the more stable your record actually is, the easier it will be to find people who are willing to vouch for you.
Know What You Can Afford
This small piece of information is very important in your ability to get into a rental with no credit. Most people overestimate how much house they can afford. When you are renting with no credit, or a poor rating, you should err on the low side of your projected budget.
Because the property manager will be more aware of the risks, you should never put yourself in a position where you might be unable to pay on time. In fact, arrange your finances so that you can put aside a bit each month for an emergency fund. Your rental payment should be your number one priority when it comes to your monthly bills.
Develop a Personal Relationship
When you have no credit, a crucial part of the process that will determine your success will be the personal contact that you have with the person that is making the decision about who to rent the house to. The first impression that you make when you view the house will be critical.
It isn't possible to pay too much attention to your appearance and grooming. Wear a tie if you're a man, and a skirt if you're a woman. Take a bit of extra time with your grooming.
Many landlords will do away with standard procedures and overlook the lack of a positive credit score if they like the potential tenant on a personal level. There will be a fine line during this process between being pleasant and falling all over the property manager. You don't want to appear desperate, but rather competent, capable and friendly.
Offer More Value
The most inconvenient part of renting to most landlords is the maintenance clause. Landlords are legally obligated to take care of problems around the home after you have rented it. If you or your spouse are handy, and are willing to take care of minor issues on your own, this will be a huge incentive to the landlord to give your application favor over those that will need more hand holding with home maintenance.
If you like to garden, request permission to improve the landscaping. If you enjoy puttering, ask if the manager would mind if you added a deck. If the landlord knows that you are willing to put in some time and effort and that it will add value to the property, that is free money to them. This can more than make up for the lack of credit on your part.
Explain Yourself Up Front
If you have followed the above procedures and then submit your credit information with no explanation, you can be shooting yourself in the foot. It's always better to sit down and explain the negative portions of your credit report than it is to throw it on the table and hope for the best. The landlord will appreciate the extra information and the honesty in which it is delivered will reflect favorably on your application process.
You can also just mention that there have been problems with your report that you are working to improve, and ask that that paperwork be waived. If there is enough information and reliable references already, the landlord will be more likely to give you a pass on the credit report.
Like most things in life, the landlord/tenant relationship will be built upon your personal interaction. This process will begin as soon as you meet a property manager. Each step of the process will bring you closer to your ultimate goal of getting into a house with no credit. Pay attention to your appearance and be friendly.
Make sure that all your paperwork is in order and that all aspects are favorable, besides the credit check. Be willing to offer more value to the property while you reside there and take the time to explain what previously went wrong with your credit. By following these steps, you can make a good impression and increase your chances of winning over the landlord despite your lack of positive credit.
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