When you have no credit, it can feel like you are stuck, with few options, and struggling to move forward in your life. It can be difficult to get a credit card or a good car loan, which can be frustrating when these are the type of things you need in order to build credit.
What might feel like the biggest challenge with no credit is trying to rent an apartment. It’s possible to survive without a credit card or a car, but you always need a place to live. If you need to be able to rent an apartment but don’t have any credit, here’s how you can do it.
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Build Credit Quick
There is a big difference between having no credit and having bad credit. No credit means you are a blank slate, a proverbial mystery to anybody checking your score. The reason why landlords, lenders, and credit card companies may be hesitant to do business with you is that there is no evidence you are credit-worthy.
Bad credit, on the other hand, is evidence that you can’t be trusted. It’s harder to put a positive spin on your credit history when there are negative items littered throughout your credit report. Fortunately, having no credit means it can be easier to start out strong, and let a few good moves turn into good credit, fast.
Since your record is bare, any positive credit acts you do will make efforts towards increasing your credit score. If you can put off getting an apartment for a few months, it’s possible to transform having no credit into amazing credit.
One good way to quickly build credit is to either get a credit card through your bank or get a secured credit card. Then, make sure you pay off your credit card every month, and in no time, you’ll have good credit.
If you don’t have a few months to spare on building credit though, there are other options for finding a place to live.
Consider Roommates With Good Credit
It’s quite likely that if you are getting your first apartment, you are considering getting some roommates to help with the rent. While you might not have any credit, it’s possible that potential roommates will.
Often, landlords only check the credit of one of the tenants, and if your roommate has good credit, then you’ll be covered. Even if they do a credit check on both of you, having one person with good credit on your lease is going to be a lot more convincing than providing no credit for the landlord to refer to.
If you do want to get a roommate, be sure to sign a separate lease. That way, if your roommate breaks the lease, your credit isn’t at risk, only theirs.
Get a Co-Signer
If you don’t have any credit, many landlords will require somebody else to be on the line if you fail to pay. A co-signer basically is somebody who says, “If this person doesn’t pay their rent, I will.”
While this does solve your problem of getting an apartment, it can put a loved one in a tough situation if you can’t make your rent. They have to pay your bills if something bad happens to you, and if they can’t, then it’s their credit that takes the hit.
If you do choose to get a co-signer, be sure it’s somebody you trust and somebody who will work with you if things go bad. It’s also a good idea to make sure that they could cover your rent payment in an emergency, so their credit doesn’t take a hit.
Provide Proof of Income
Your credit report isn’t the only tool to prove your financial standing. If you have a stable and good-paying job — often a requirement for renting an apartment even if you have great credit — use that to prove you can afford the apartment.
During the interview process for an apartment, take a copy of your pay stubs to show you can handle the rent. It’s especially helpful if you have worked for a long period of time, showing the stability of your job.
Provide Reference Letters
Alongside a proof of income, having other people vouch for your trustworthiness can go a long way. Find people who you have helped or proved yourself to, and ask them to write a letter of reference for you. Employers are a great option for this, as they can verify your income as well as your stability — both great indicators for a prospective landlord to see. Other good choices for recommendations can be old teachers, bosses, neighbors, and family friends.
Explain to them that you are wanting to show how responsible you are and how that will extend to being a good tenant. Things landlords are going to look for include:
- Meeting deadlines;
- Handling responsibilities on your own;
- Taking care of other people’s property;
- Other signs that you are a safe bet with their investment.
Paying Bigger Security Deposit or Paying in Advance
The reason landlords want responsible tenants is so they don’t lose out on money. Irresponsible people don’t pay their rent, or they abandon their place without informing the landlord. For this reason, it is common for people with bad credit to end up paying more in rent, in their security deposit, or both. The same holds true if you have no credit history, but it may be more negotiable.
By offering to put down a bigger deposit, or to pay your rent a month or two in advance, you lessen or negate their risk of losing money. A landlord will likely be more inclined to take on somebody with no credit if they know that they won’t lose money.
It’s important before agreeing to this arrangement that you’ll be able to take on that heavy initial burden. Basically, you need to have enough cash available to pay either a larger deposit or extra rent. However, the risk to a landlord of renting to someone with no credit, as opposed to bad credit, is significantly less. Especially as a first-time tenant, it is in your interest to start building a positive rental history and better credit. You may want to delay paying more in rent as a negotiating tactic until:
- You are certain you’ve found the best available apartment;
- You’ve tried every other tip and trick listed here;
- You’ve offered to use direct deposit as a guarantee of on-time payment every month;
- You’ve offered to pay a larger security deposit upfront, but without paying a higher rent.
Once a landlord knows you’re willing to pay more, it can be hard to get them to agree to anything less. Remember: bad credit is not the same as having no credit. While having bad credit may very well cost you extra, it is possible to get an affordable first apartment without signing up to pay more than you have to. Offering more money can be effective, but it may be cheaper for you to try the other techniques listed above as a first resort.
Offer to Move in Immediately
Vacant rentals can cost landlords money every day there isn’t someone renting the space. If you let them know you are ready to move in and afford the rent, you could possibly get into a rental without any credit history. This can sometimes create other obstacles such as non-refundable deposits, or additional rent upfront, but terms will vary depending on the renter’s policies.
Getting That Apartment
If you have no credit, you should expect to jump through a few extra hoops to get an apartment. If you can put it off for a few months, the best solution is to just start building your credit now. Then, those extra hoops, such as a larger deposit or getting a co-signer, won’t be necessary. But if you can’t wait, then negotiate with potential landlords to see which hoops you’ll need to go through.
Finally, you need to be extra responsible with your apartment. Landlords often report their tenant’s activities to credit bureaus, which can lead to changes in their credit reports. If you pay your bills on time, then that means positive things on your credit report. Couple that with good credit card etiquette and paying all of your other bills, and you’ll have good credit in no time. Then, you can renegotiate your contract (or get a new apartment) with a better contract.
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