Bankruptcy or foreclosure have a negative impact on your credit scores, and poor credit presents a major problem when trying to rent an apartment. When you submit a rental application, most landlords, and apartment companies run your credit report. When bankruptcy or foreclosure show up on your credit report, they work against you to reduce your chances of finding a new place.
If you anticipate that a landlord will consider your damaged credit in making a decision, there are some things you can do to increase your odds of getting rental approval notwithstanding your poor credit.
How to Successfully Rent an Apartment After Foreclosure or Bankruptcy
1. Tell Your Story
In most cases, foreclosure, and bankruptcy result from circumstances that are beyond your control. Explain the real-life circumstances surrounding your bankruptcy or foreclosure and how these circumstances have already changed. Make the landlord understand that neither will these conditions happen again nor will your past financial problems impact your ability to pay rent.
A landlord will be more willing to rent you an apartment if he believes that your credit problems arose from unavoidable circumstances rather than poor debt management.
2. Offer a Larger Security Deposit
This may not always be possible for someone who is coming out of a foreclosure or bankruptcy, but offering a larger deposit increases your chances of getting approved. If you offer a higher deposit than the required amount, most landlords will tend to take you seriously. You will be proving to them that you have the funds to pay your rent in time without getting hurt by your poor credit. This gives the landlord some peace of mind, making it easier for you to secure the rental apartment you want.
3. Use Your Rental History
If you have rented in the past and are in a position to show that you were a good tenant who paid his/her rent in time, point it out in your rental application. You can present documentation of your good rent-paying history to your potential landlord. Copies of receipts and canceled checks are likely to convince the landlord that you will be able to pay your rent in time.
4. Get a Co-signer
In apartments where strict credit policies apply and a prospective landlord refuses to consider your circumstances, having someone with a positive credit history co-sign for you will make it easier for you to get approved for housing. With a co-signer, you can be sure to find a reasonably priced rental apartment.
When you rent an apartment with the help of a co-signer, it is important that you pay your rent on time, abide by the terms of your lease and leave the apartment in a good condition. You don't want a co-signer to put their credit on the line for you and later regret their decision when you fail to honor your word.
5. Gather a List of Letters of Reference
Sometimes, explaining your circumstances won't convince a landlord to rent you an apartment despite a foreclosure or bankruptcy. Obtaining professional letters of reference from people you know well like your employer, business associates, and former landlords will make the landlord more willing to rent you an apartment.
A letter from your employer verifying your employment will show that you have a source of income and are capable of paying your rent. A letter from a past landlord noting that you were a good tenant is even better because it will answer the landlord's main question: Can you be trusted to pay your rent?
6. Have a Job or Prove of Income
Your chances of being approved for a rental apartment after a foreclosure or bankruptcy will be higher if you can demonstrate that you will afford the rent. Bring your pay stubs or any other proof of your monthly income when you apply. For those who are self-employed, you can show your current bank statements. Most landlords will approve your application if the rent doesn't exceed 40% of your income.
7. Look for ''No Credit Check'' Apartments
If several landlords have turned you away due to foreclosure or bankruptcy, consider looking for rentals that are offered without performing credit checks. Although they may not be the kind of apartments you want to live in, you can easily secure your new place at these smaller properties.
If you are in a situation where you need to find a new place but are worried how a foreclosure or bankruptcy will affect your apartment search, use the tips above to make your search easier. You will obviously have a hard time, but with these tips, you can't end up without an apartment.