Will I Be Able to Rent A Property With Bad Credit, A Bankruptcy, or A Foreclosure? | Plainfield Real Estate

Let’s face it, good credit is hard to come by these days, and most real estate investors know this. Even if you have bad credit, chances are there is an investor/owner out there that will be willing to rent you their property, but not without conditions.

If you have a bankruptcy, low credit scores, or a foreclosure on your credit report, it will require more on your part to successfully negotiate a lease agreement. If you aren’t sure what your credit score is, you need to run a credit report and compare that number with the FICO, Fair Isaac Scoring system.

Just as with financial lending, a credit score indicates the risk level involved in extending credit. As a general rule… past behavior predicts future behavior. As a means to protect their investments, investors will ask for more in security as collateral in exchange for the accepting the risk involved in approving someone who has a history of late or non-payment.

If you have poor credit and were to apply for any kind of loan, it’s a known fact that you will pay more in interest than someone who has good or excellent credit. Credit cost money and so does assigning that risk to another party through a lease agreement.

It is not uncommon for a Lessor to require a 2 months security deposit, in addition to the first month’s rent with credit scores below 550 or apply additional requirements, for example; interest or penalties on late payments. Many landlords will also ask to see pay-stubs to verify employment and request references from previous landlords. Providing a hardship letter in addition to your application will provide greater insight as to why your credit scores are low, whether it was from a temporary set back, loss of income, or health related issue. Since applications are considered on an individual basis, hardship letters can help sway a Lessor’s decision either way.

While it’s not impossible to find a landlord willing to rent to tenants that have less than perfect credit, it may take some time. Not all landlords are willing to take on the risk of a renter with bad credit, so even though you may have found the house of your dreams, you may need to keep looking. The final call is made by the owner of the property after their review of the application and credit report to determine acceptance of your application.

Julie Ferenzi | Realtor®
Plainfield Real Estate
630-673-6233