Renting When You Have Low Credit or Eviction History
- Adam Garrett
- May 6, 2023
- 9 min read
Updated: Feb 14
When you have less than a 620 FICO credit score or eviction history, acquiring a home can be difficult. Thankfully there are many resources today to help assist with securing a home for yourself. Below we'll start with cleaning up your finances & credit (which will present the widest range of housing options in the short & long term), then proceed to preparations for those with existing negative history that can't be cleaned up fully in time for a move.
I. Get Your Finances & Credit in Order:
Clean Up Your Credit
Get educated on credit and start cleaning up your credit. There are free and paid ways to do that.
Establish & Stick to a Budget
Establish & stick to a budget including tools to monitor all of your spending like Mint.com (free)
If Your Credit Score is Below 720, Use Debit Cards
While I firmly believe in credit cards for some, and even help my business maximize their returns on credit card spending, the majority of people lose more money than they gain by them. People tend to spend more if it’s available. If you have even moderate credit, I, as someone with dozens of credit cards who loves to recommend credit cards to others, suggest stop using your credit cards except <$5 transactions once a month for any accounts with no balance with automatic payments in full on any cards like that (otherwise accounts with 0 balance can get shut down from no use after a long time). I recommend shifting all of your spending to debit cards. Cash back debit cards are strong options where you can still get some rewards even though the rewards aren’t as good as with credit cards.
Especially if you have below 680, but even if your credit score is 680-720, you still may want to consider using debit cards only. Here are more cases where I recommend using debit cards even if you have 740+ credit score.
Here's how to get your free credit score (hint - it's not Creditkarma & not all scores are created equal).
Have an Emergency Fund
Establish an emergency fund of $1k if you don’t already have it.
Have Funds for a Double Security Deposit
Establish enough funds for 3 months rent: 2 months for a double security deposit and 1 month for rent.
Avoid Bad Debt
Also I recommend avoiding taking out a loan for a car or other debt if at all possible (unless doing so would reduce the interest you currently pay), even if it means buying a $600 relatively low mileage car to replace yours like I once did. If you need to get a car, something of low cost, low mileage, high reliability ratings, & purchased in cash is ideal. In 2021, I don’t own a $600 car, but the car I own was purchased in cash w/ <70k miles on it for less than one month of my income. It still hasn’t depreciated to what I paid for it, depreciating at a relatively slow rate because it’s 10 years old. It’s a quality vehicle where the maintenance costs are low enough where it doesn’t make sense to me to get a used car warranty, though that’s an option if you currently have an unreliable vehicle. I do recommend full auto insurance coverage with a high deductible that you can cover with your emergency fund as well. Be careful of scams when purchasing a car & other used items from individuals & in some cases even from seemingly reputable businesses. I’d much prefer to put my money in appreciating assets, like home purchases & investments, than into a depreciating asset like a car.
If You Have Debt, Use the Debt Snowball
If you have non-mortgage debt, start the debt snowball approach.
Get Educated on Taxes & Ways to Save
Get educated on taxes and ways that you can save money. For instance, many of lower income who could qualify for the savers credit are unaware of an annual 50% return essentially available at the time of this writing funded by the US government in the form of the savers credit. Travel hacking is fun if you want to travel, but it’s best accomplished once you have better credit. Non-profit and government assistance can also be helpful at times.
Increase Your Income
If you feel that your income is a problem, it’s not a bad idea to look into alternative jobs, whether additions if you have the time, improving your current income at your current employer (whether through hours, harder work, education, or otherwise), or changing jobs.
Seek Rental Assistance
Explore options for rental assistance if you think you may qualify (i.e. due to low income for household size/disability).
Build Credit Via Rent
Here’s how to build credit using apartment rent.
II. Prepare for tenancy in non-financial/credit capacities:
Some Rules Might not be Written in Stone, Especially When Strategies Below are Combined
In some cases, a property management company or property owner might not mention in their tenant screening criteria details on exceptions. For instance, they may not mention in that criteria that they will give you a pass for medical collections. They may say "no unpaid collections" even if they frequently give a pass to those with medical collections. Also, they may have a rule that they typically wouldn't break that they are willing to break when you present things like a higher security deposit, higher rate, and prepaid rent as long as lawful to do so.
Consider Prepaid Rent if You Have $
While not an option financially viable for many in this situation, if you happen to be in a position where you have sufficient liquid capital for prepaid rent, it is 1 of the best options available to open at least some of the doors that would typically be shut for those with low credit and eviction history. Find out how long it takes to evict someone in your state (per Google AI, 2-4 months in VA), and offer a prepaid amount in excess of that number, or if they don't budge, even a year of prepaid rent is sometimes a possibility.
State laws vary here, but in VA,
§ 55.1-1205. Prepaid rent; maintenance of escrow account
"A landlord and a tenant may agree in a rental agreement that the tenant pay prepaid rent. If a landlord receives prepaid rent, it shall be placed in an escrow account in a federally insured depository authorized to do business in Virginia by the end of the fifth business day following receipt and shall remain in the account until such time as the prepaid rent becomes due. Unless the landlord has otherwise become entitled to receive any portion of the prepaid rent, it shall not be removed from the escrow account required by this section without the written consent of the tenant."
Consider a Co-Signer
Even if there's no mention of a co-signer in the requirements, sometimes a c0-signer with great credit and a low debt-to-income ratio can push you over the edge to being approved. Family and your closest friends are some of those to ask about co-signing with you.
Consider a Higher Monthly Rate than the Advertised Rate
While it's important to check state and local laws, one other option is to offer to pay a higher rate than the rate that's advertised.
Look for Unwanted Properties
"Search for a home that has been in the rental market for a long time, especially one in a not-so-popular locality or in need of renovation. Most often, the renting terms are less stringent for such low-demand properties. In spite of your bad credit, you'll be able to rent these more easily.”
Consider Craigslist, AirBNB, & the No Credit Filter on MyHousingSearch
Even if you need a house, Craigslist and Airbnb are solid places to check if you have bad credit. Airbnb has a rating system for landlords & has an option for instant booking even (with no credit check etc.) that some landlords opt into. Sometimes Airbnb monthly costs are lower than their nightly rates, even below $500/mo at times if just looking for a room to rent.
With MyHousingSearch, there's even a filter for properties with no credit check (bottom middle):
Establish a Spreadsheet for Rental Policies by Company &/or Address
Establish a spreadsheet like this one for rental policies by company &/or address. It's best to delete any columns that wouldn't apply to your situation &/or that you wouldn't care about.
Check Whether You Should Rent or Buy
Consider options for purchase to see whether it’s best for you to rent or buy
Seek a Flexible Landlord
"Find a landlord who doesn't run a credit check. By bypassing a large management company and going private, you will (more likely) be able to get a rented home on reasonable terms. The best places to find an owner-rented home are in the local newspaper classifieds and online classifieds.”
I would also advise looking at for rent by owner options in my list of places to look for rent. Often you can get rules and procedures prior to a showing even among property managers. For instance, while familial status is supposed to be a protected class, some property managers will require that all unmarried adult tenants be able to qualify based on their individual income being a certain percentage more than the lease amount, i.e. 200% more. Some property managers will request that all adults go through a background check, and some will not. By knowing the information that the property manager or landlord will be looking for in advance of a showing, you avoid wasting a lot of time. You can create a list like this one based on the negative qualities that impact your ability to rent.
Have Good References
"Show good references when applying for your new rental house. If you are able to show a letter from your former landlord with good feedback about you, your bad credit might matter less. The letter should include the duration of your stay in the property, your relationship with other tenants and your rental payment track record.”
If Renting With Someone Else, Have The One With The Best Score Apply
Some rental applications won't allow this idea if they require that every tenant 18+ apply, but there are some exceptions, especially private landlords with a small portfolio.
"Rent under your spouse or domestic partner’s name if he has a good credit score. Be aware that the landlord may still ask you to sign the lease. In that case, your credit will be checked, but your spouse's higher score may mitigate problems.” Often there are minimum requirements for both, but sometimes exceptions can be made.”
Related: Tips on Roommates
Rooms for Rent
Consider rooms to rent in places like Craigslist & Airbnb if you are very low on funds
Use a Wide Search Area
Use a wide search area for properties to consider if you are low on funds & have good transportation at a low cost, but keep in mind that some people lose more than they gain by long commute times. The IRS method (57.5 cents per mile in 2020) is a decent way to determine your transportation costs, though the actual method is viable as well, especially if you have no tolls, low income (because I recommend factoring in your commute time based on your wage & other factors), & a low depreciation rate vehicle with high reliability getting high MPG. As a point of reference, here’s how I compare commute costs to purchase costs when considering a long commute.
Consider a Higher Security Deposit or an Alternative to a Security Deposit if you Don't Have the Capital for One.
State laws vary here as well, but in Virginia, it's possible to have up to a 2-month security deposit. It's not uncommon to be denied, then offer a higher security deposit (especially up to the legal limit) and other financial incentives to help you be approved.
VA legal code: § 55.1-1226. Security deposits.
Related:
Quotes for some of the above from Homesguides.
More for Tenants
About the Author: Adam Garrett - 3rd Generation REALTOR®
Adam is the 3rd generation in a line of award-winning real estate agents serving SE VA. He has served full time at Garrett Realty Partners since May 2014 when he joined the marketing department before transitioning to full-time sales to assist buyers and sellers in February 2015. He believes that an educated buyer or seller makes the best decisions, & is dedicated to helping with that both digitally & on-site physically for buyers & sellers. He's also available for referrals to real estate agents around the globe. In several capacities, his resources & direct offerings for assisting sellers & assisting buyers are either unmatched or are top 1% for the SE VA area, and in some cases, nationwide. Not stopping after closing, he also provides information for tenants, landlords, & homeowners.
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While Adam can refer buyers and sellers elsewhere, Adam’s direct coverage includes most of SE VA including Hampton Roads (VA Peninsula, Southside, & Middle Peninsula), the Northern Neck, & Greater Richmond.
Adam's Coverage Map with Adam's 5 Multiple Listing Services highlighted in orange & areas without good MLS coverage excluded:
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