Life happens and sometimes job loss or long-term illness can result in a low credit score that can impede your ability to rent an apartment or house.

Leasing an apartment or house with a poor credit score can be challenging, but it’s not impossible.

Hear are some numbers: approximately 16% of Americans have very poor credit, or a FICO score of between 300 and 579, according to Experian’s 2019 Consumer Credit Review. Another 18% have fair credit, a score of between 580 and 669. Only 1.2% of Americans have a perfect 850 credit score.* Fox Business reports that 30% of Americans have either poor or bad credit.

What is Considered a Poor or Bad Credit Score

VantageScore divides consumers with credit scores into five groups: Super prime, commonly called excellent credit (781 to 850); prime, or good credit (661 to 780); near prime, or fair credit (601 to 660); subprime, or poor credit (500 to 600); and deep subprime, or bad credit (300 to 499).

When it comes to housing, the Federal Housing Administration which offers mortgages starts to consider a consumer eligible for one of their mortgages when their score reaches 580. Property management companies are often looking for scores higher than 620 to approve a rental application, and some landlords for high-value properties are looking for scores around 750 or higher.

Some landlords – often regular people who want to rent a property they’ve bought and hold for a while, or professional real estate investors – are flexible. Sometimes they find tenants through social service agencies or trusted real estate agents who might have a potential tenant with a good job but low credit score.

The good news is a private landlord could be a great option for getting approved. The bad news is that it can be easy to fall prey to unscrupulous landlords who lease substandard housing, do poor maintenance, if any, or charge usury fees. Do your homework. Make certain the landlord has the proper licenses from the county or state the property is in. And get any agreements in writing. In a court of law, if a promise is not written down and signed by both parties, it does not exist. Handshake agreements to take care of maintenance or repairs can be expensive for the tenant in the long-term because they are not enforceable in court.

Strategies for Leasing a Home or Apartment with Poor Credit

Here are some strategies you can use when looking to rent an apartment or house with less than perfect credit.

1. Find a real estate agent who can help you search. They often know if there is a landlord willing to rent to someone with poor credit. They may help you present yourself well on your application. Sometimes it means writing a letter of explanation about why your scores are low and how you’re working to fix it.
2. Look for private landlords: Large property management companies often have stricter credit requirements. Try searching for apartments owned by a homeowner or real estate investor who may be more flexible in their criteria. But do your due diligence. Sometimes landlords who rent to people with poor credit histories have substandard rental units and dodgy business practices. Make sure they are licensed in the jurisdiction you are in. Have an attorney review the lease before signing it.
3. Offer a bigger security deposit. This may give the landlord a little peace of mind that they can hold a larger security deposit as insurance against nonpayment. Check your local housing laws, however. Some states do not allow landlords to ask for or accept more than two months’ security deposit.
4. Use your income. Presenting legitimate pay stubs demonstrating stable employment may help you secure the unit you need.
5. Look for property management companies with less strict credit requirements. While a good option, be careful of additional fees and make certain the property is in a safe, secure area.
6. Be willing to give up amenities. You don’t need a gym or pool to live your best life. So check out properties that don’t have those pricey extras.
7. Take a personal finance course. If you’re been wonky (yes, that means irresponsible) in paying your creditors on time, this is a good time to take an online or in-person budgeting course. Some entities provide a certificate upon completion. Let your real estate agent or potential landlord know you’re taking actionable steps toward improving your credit score and financial health. That enthusiasm and mature attitude may land you an approval.

Stay Away from Co-Signers

Let me say that louder for the people sitting in the back of the room. Stay away from co-signing agreements.

Some landlords will suggest finding someone with a better credit history who can guarantee your lease. Do. Not. Do. This.

First of all, if you’re a working adult, you need to be able to secure housing on your own and start rebuilding your credit profile.

Second, it could potentially lead to a damaged relationship should something happen. Your friend or family member might have to pick up that very expensive check if you default on your obligation. Not only will your credit be damaged, but so will theirs. However, that’s nothing compared to the loss of a friendship or familial relationship. Co-signers are never a good idea, no matter what side of the table you’re on. It may mean you have to couch surf a little longer, but being able to stand on your own financial feet is a major win.

Remember, building your credit over time is crucial to improving your financial standing and making future rental applications smoother. Use this opportunity to demonstrate responsible financial behavior and work towards improving your credit score in the long term.