Dealing with bad credit — or no credit — can put you at the bottom of the applicant pool when you're looking to rent an apartment. It's an added stressor to an already hectic process.
There are many reasons why you end up with credit score issues though, from failing to pay bills to job loss to identity theft. Not every situation is your fault, and most people immediately start working to repair their credit once something happens.
To give a potential property manager the whole story, you may want to get out in front of the situation. Consider writing a letter explaining your credit problems. This is not only a chance to get all your bad credit out in the open, but the opportunity to explain the steps you're already taking to clean up your finances. You should also toss in a few reasons why your credit doesn't interfere with what a stellar tenant you are.
According to OppLoans, certain financial decisions, “can hinge on something as simple as a letter." While you may not think of renting an apartment as a financial decision, it's guaranteed your property manager does. That's why credit checks get run in the first place, and why having good credit is important.
When ideal credit scores aren't in your future, though, you need to think outside the box. Tell your credit story as an actual story rather than letting the numbers speak for themselves.
A letter of credit for rent lets you address and explain the red flags that will pop up in your credit history. There's often more to the story than, "I just don't like to pay my bills." This is your opportunity to convince a property owner that you can and will pay rent, even if your credit score may say otherwise.
The two primary reasons you need to write a letter of credit for rent is having bad credit or no credit. Both raise the eyebrows of property managers since both make it hard to verify you pay your bills — including your rent — on time.
If you have no credit, you're most likely a first-time renter, coming out of living with your parents or in on-campus housing. It's OK to share that information in your letter while also discussing the job you've just gotten and the money you've saved up for your first home.
If you're worried about your credit score, you might want to check it first. FICO is one of the most commonly checked credit scores. By their rating scale, a fair score is between 580-669 and a poor score is between 300-579. If your number falls anywhere within these ranges, a letter of credit for rent could prove extremely useful.
Make sure to explain the details surrounding your damaged credit, and what you're currently doing to repair it. Share information on your current employment status to show you have money coming in regularly.
It also doesn't hurt, with any of these letters, to include a few character references from friends, family or co-workers. They can help show that you're a responsible person and vouch that you'll be a good tenant.
The actual letter of credit for rent should be as transparent as possible. Stick to the facts, and don't hide any information. It all comes out in the end anyway. The goal is to admit the mistakes you've made while demonstrating the strides you've taken to become more responsible.
If possible, in addition to a physical letter, start building a relationship early by getting your property manager on the phone. You can even try to set up a meeting to talk about this in person. It helps demonstrate sincerity and ensures your property manager understands that, even with this blip, you'll pay rent in full and on time.
This sample letter explaining credit problems will help you focus your efforts when appealing to a property manager for an apartment. Simply download this template and fill in the information for sections where you see parentheses ( ), or add your own personal details when relevant.
If you have letters from creditors or proof that you have made strides to fix your credit, attach them at the end of the letter as well.
(Current Address of Your Apartment, unit ###)
(City, State, Zip Code)
(Landlord Or Apartment Company's Name)
(Address as Printed on Your Lease)
(City, State, Zip Code)
Re: Letter detailing my credit history
Dear (Name of landlord or manager),
As you know, I'm interested in renting apartment number (fill in the blank with the apartment number). This letter explains my credit history and why it is currently at (include your current or estimated credit score).
(Give specific explanation here. Start with the paragraph below if you want.) As you can see from my credit report, I made late payments on my (list where you have made late payments, such as student loans and credit cards). It was during this time I experienced financial hardship, as (explain your reasoning, such as a lay off).
(Provide more details around your steady income. Start with the paragraph below.) Since then, I have found a full-time, steady job and have been employed for (length of employment) almost a year. I would like to move closer to (the reason you want to move here, such as job, family, school, etc.), therefore, I'm interested in renting the unit.
I am working diligently to fix my credit and raise my score by (explain what you have done, such as paid off all outstanding bills). I've contacted the creditor as well as the credit bureaus so they can mark these to “paid" status. (Only include this last statement if true.)
Despite these issues, I believe I am an ideal tenant. I can provide the following for you:
I am actively working on building my credit score by paying my bills on time and checking my score each month.
If you have any questions or concerns, please contact me at (phone number) or (email).
Thank you and have a great day.
You'll notice in the letter template a reference to a co-signer. This is perhaps your best weapon against bad credit. While it's effective to share what you're doing to repair your credit yourself, a property manager may still proceed with caution letting you sign a lease. With a co-signer who has good credit, you're eliminating the risk. You're reassuring the property manager there is someone who will pay for this apartment, no matter what.
Renting an apartment is serious business and something you may have to fight for. Don't be afraid to advocate for yourself and speak up.
Get the whole story out early in the application process and don't let rejection be the end of the conversation. Between a letter explaining credit problems and one that tries to appeal a rental rejection, you'll know you're doing all you can to secure that perfect new place.