How to Improve your Chances of Renting when you have Bad Credit
By Laurence Rosenberg

October 2012

Most landlords will run a credit report on you and if they discover your bad credit, they are likely to deny your application. So what do you have to do to rent an apartment? You need to understand the landlord's thinking so that you can anticipate their concerns and adjust your application accordingly to present yourself as a reliable future tenant. This article will give you tips and examples how you can make your application the best it can be even if you have bad credit.

Let's start with the basics. Why do landlords need to know your credit?

Landlords will tell you that owning and running a rental building is expensive. There are real estate taxes to be paid, perhaps a mortgage to be paid, electricity to light the common areas of the building, heating, water consumption, repairs, and staff expenses like superintendents and porters.

Having a tenant who doesn't pay the rent on time makes it harder for the landlord to pay the fixed costs for the building each month. Landlords want to be sure that every tenant is going to pay the rent promptly every month. Your bad credit indicates to the landlord that you might be a risk to be avoided.

It's important for you to know that not all bad credit is "bad" in the same way.

There are 2 main reasons why someone's credit is bad:

1) You're a deadbeat who doesn't pay your bills. Since being a deadbeat affects your whole life, I call these debtors "dead enders."

If you're #1, sorry, you will have a very difficult time trying to rent an apartment. Your best bet is to be able to offer the landlord a year's rent upfront, which removes any risk the landlord has. This option is very effective, but cannot be used with rent stabilized apartments, as the Rent Stabilization Law makes it illegal for landlords to accept more than one month's rent and one month's security.

Having an exceptionally good guarantor might get you over the hurdle of renting, but remember, if you don't pay your rent on time, you'll be hurting your guarantor. Your final option will be to find a small owner of a two family house or similar small property who doesn't do credit reports. But keep in mind, if you don't pay rent to such a small owner, you will definitely be hurting them very directly, and your Karma will pay a heavy price.

2) There was a one-time situation in your past that ruined your credit.

If you're #2, you can take steps to assure the landlord that a financial problem in the past doesn't make you unreliable. Tell the landlord right away that you've had a problem but your finances are currently OK and you can be relied on to pay the rent each month. Many landlords (but not all) will appreciate your honesty and you'll look like a trusty person because you acknowledge your difficulties and have taken responsibility for them.

Here are some tips on how to present your application to the landlord:

A 'Must Have' is to use a cover letter with your application to tell a landlord about your past financial problem(s).

A landlord's major concern about a new tenant is that he/she will pay the rent each month when it's due. Start your letter with an acknowledgment that your credit report is not so great but that you learned a lot about financial responsibility because of your problem and reassure the landlord that he/she can rely on you to honor your financial obligation to pay the rent every month.

Then, explain the problem simply, factually, and without self-pity or pointing the blame elsewhere. The details of how or why you had a problem will not interest a landlord. Pretend the landlord is Judge Judy who only wants to know what happened. This will be your second paragraph.

Next, explain what you're doing to fix the problem. Write simply, factually and without self-congratulations. Explain that you're on a monthly re-payment plan to repay old debts; or that you closed all credit accounts and now live cash-only to stay within your budget; or that your bankruptcy was 2 years ago and since then you've met all of your financial obligations. Be honest. This explanation will be the third paragraph.

Your fourth paragraph is where you sell yourself as a tenant by being totally business-like. Renting an apartment is a business transaction so assure the landlord that you will treat your rent payment like a business obligation. The application will have the details of your current finances, so use that information to point out the highlights of your current situation: you now have a job that pays $XX,XXX a year, or your current bank statement shows adequate funds to meet the up-front expenses (security, first & last month's rent, etc) [Note: for rent stabilized apartments, paying the last-month's rents would be an illegal overcharge], or that you're grateful that your bankruptcy gave you a second chance to demonstrate your financial trustworthiness that you'll never jeopardize again.

Finally, tell the landlord why you applied for the apartment: it's within walking distance to your job and you can save a lot of money in commuting costs, or the building is near a park where you can jog or ride your bike or do other healthy and free activities, or you love the smell of garlic if it's on top of a restaurant. The idea is to show to the landlord that you value his/her property and would take good care of it conscientiously.

Here are some additional thoughts you will want to add to your cover letter.

Use the cover letter to say anything of importance that you want the landlord to know. This is your opportunity to frame the conversation the way you want and get the landlord to look at the positive reasons why you should be selected as the next tenant.

For example, if you are rising in your company, let the landlord know that. If you have good prospects for a promotion in the near future, let the landlord know that. If your spouse is also rising or being promoted within their company, let the landlord know that. If you can get your current employer or your spouse's employer to write a letter of recommendation that will help you dramatically.

Anything else that you can think of that will help your cause should be added to the cover letter. For example if you have a child or children who are on the honor roll in school, let the landlord know that. It shows the kind of parents you are and the kind of household that you run. If you are about to graduate from some specialized training that will make you a more valuable employee, mention that. If you are about to be licensed in some vocation (plumber, electrician, etc.), let the landlord know that.

Make sure that you have several copies of all your application documents and supporting paperwork neatly put together and stapled - with your cover letter being at the top of each application package. Make sure that you bring your application packages with you when you go out looking for apartments and leave your application package with each landlord you want to apply with. Don't be afraid to make more than one application. You need a place to live and you can't count on any one landlord accepting you.

Regardless of whether you're a "dead ender" or "temporarily damaged," you should also prepare the following in order to increase your chances of renting an apartment.

As I said earlier, being a landlord is a business so you need to be very businesslike in your approach to the landlord. Being businesslike is a non-verbal way of letting the landlord know that you understand his needs and concerns, and that you can handle them. It also lets the landlord know that your intentions are honorable.

Before you go out to look at apartments, put together all of the documents that you will need to show a landlord. Fill out an application form in advance, which will help you organize all of the relevant bits of information that you need. You can download a generic application form and a generic guarantor form here. Most landlords will accept these application forms. You will also need to have your year-to-date pay stubs to prove your employment and your income.

If you can get your current landlord (or the landlord before the current one) to write a nice letter of recommendation for you, you should do that. Particularly if they can say things such as you are clean, respectful of their property, and quiet. Of course saying that you pay the rent on time every month would also be helpful!

You need to know what your annual income is from all sources. if you have a spouse you need to know what their income is as well and you can combine both incomes to qualify for an apartment. If you have a roommate, many landlords will not allow you to combine incomes to qualify for the apartment unless you can show that you have been ongoing roommates for a long time.

[Note: Landlords usually don't combine the incomes of roommates because it's always possible for one roommate to leave, leaving the remaining roommate to "hold the bag," and responsible for all the rent. Landlords do not want to chase a former roommate across the country for half the rent when legally they still have a tenant in place who is legally responsible for ALL the rent.]

Do not wait until you are in the landlord's office to start trying to figure out what your annual income is. When a landlord asks how much you earn, they are asking for your annual income - including all sources of income. Do not reply that you earn XXX per week, or that your take home pay is XXX per week. If you do that, they will know immediately that you have no idea about how to manage your financial affairs. Knowing your gross annual income shows that you can see "the big picture" of your finances.

Some final thoughts

Your cover letter will do more to help your application than anything else you can do. It will frame your conversation with the landlord. Make sure it is well written and grammatically correct. Have someone else who is a good writer proof read your letter. Do not use the first version of your cover letter. Re-read it and refine it until you are satisfied that the landlord will see that you are a fine person, in spite of whatever financial difficulties you might have had recently.

If you come off as a mature and responsible adult person, you are likely to be accepted as a tenant. If you are incomplete in your information, and evasive or ignorant about direct questions, you probably will not be accepted as a tenant.

When you go apartment hunting, dress properly, in a businesslike fashion. Don't wear shorts or jeans. If you have well behaved children who will not get loud or cause a scene or have a tantrum, you can bring them. Otherwise, leave them home with a family member or neighbor. Be respectful of the people showing you the apartment. Believe it or not, they are sizing you up. They are the landlord's first line of eyes and ears. If they see you or overhear you saying damaging things, they will report that to the landlord. In fact, always treat everyone with respect.

Educate yourself much more fully in less than an hour by looking at the free and acclaimed Essential Guide for Smart Renters. There are many topics covered that might apply to you. Be sure to look at the several sample forms and sample letters. The more you know about how landlords work and think, the easier it will be for you to be accepted as a tenant - even if your credit is not good.

Be positive, be alert, and be outgoing with the landlord. They need to like you to overcome their reservations about your damaged credit. If they don't like you, they will make no effort to consider you as a tenant in their building.

About the Author: Laurence Rosenberg is President of, a licensed Apartment Information Vendor (AIV) in New York City, and New York's oldest and largest no broker fee apartment rental company. Over 17 years, has helped thousands of renters find great no fee apartment rentals in Manhattan, Brooklyn, Queens, and the Bronx. Mr. Rosenberg has directly helped hundreds of renters with damaged credit find affordable apartments in the past few years, especially since the Great Recession started in 2008.


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