Renter Resources  

How to Discuss Credit Report Issues with a Potential Landlord

 

Before you lease an apartment, a credit check is generally required. And, the cost of this credit check is often paid by the tenant. The fee is generally a nominal one, under $50.

If you know there are issues on your credit report, you should have a plan in place to discuss these poor marks. Honestly is the best policy, of course. Read on to learn how to be ready for tough questions that a prospective landlord may ask once they pull your credit report.

1. Pull Your Credit Report for free

Everyone is entitled to a free annual credit report from each of the major credit bureaus: Experian, Equifax and TransUnion. You can also check your credit at annualcreditreport.com. This report will outline all of your credit history, and it is what a prospective landlord will see. If you know about any issues that could lead to red flags in advance, you’ll be in a better position to explain them.

2. Be Honest and Forthcoming

If you defaulted on a car loan, for example, be honest about the circumstances. Did you lose your job? Was the car part of a joint loan with an ex-partner? Be ready to maturely discuss the factors that led to a default. If the issue was unpaid credit card debt, it may be worthwhile to say you overspent and were not able to take charge of your finances. Perhaps this occurred several years ago. Be prepared to say you curtailed your reliance on credit cards.

3. Mention you Have Additional Means of Support

Perhaps your parents are assisting you with your rent, or you have another relative who is helping pay your way for a bit -- mention that to the landlord. You can even offer to get a promissory note from that relative who will state that they are helping with expenses.

4. Share How Your Financial Situation Has Improved

If the bad credit issues occurred several years ago, you may share with the landlord how you have a better-paying job now and significant savings to create a more current stable situation. Be prepared to offer up paperwork supporting your improved financial standing.

5. Offer to Pay a Higher Security Deposit or Rent

If you have your heart set on this apartment, a poor credit report may impact your chances. Try negotiating with your landlord. Offer to pay more upfront to ensure the risk they are taking can be mitigated.

6. Consider Taking on a Co-Signer

Not only can you suggest an additional source of income, you could ask a family member to co-sign or take responsibility for your rent. This is a delicate issue because the co-signer is responsible for the terms of your lease. Before you mention this to a landlord, you must have a conversation in advance with the person you are asking to guarantee your lease. They also will be subjected to a credit check.

7. Consider Reducing Costs by Sharing the Apartment

If your credit report isn’t stellar and this is stopping the landlord from granting you the lease, another option could be to find a roommate. This can reduce your expenses. Perhaps the landlord or property manager can direct you to a less-expensive property that is a better financial fit.

How to Discuss Issues on Your Credit Report

Unpaid student loans, defaulted car loans, or credit cards that you couldn’t pay are reflected on the credit report your landlord will get before they grant you a lease. There’s really no way to hide from these debt issues. The best approach is to be honest, direct and forthcoming with your prospective landlord. Lying and excuses only makes it worse.

If your credit score is low because you relied on credit cards and aren’t responsible with due dates, or if you take on too many financial obligations, consider working toward changing your financial habits and plan. Explaining this strategy to a landlord may sway their decision to rent the apartment to you. 

Once you rent the apartment, and you pay your rent on time and in full each month, this could be a stepping stone to improving your credit situation.