Credit can be an issue when you are looking for that perfect renter? Can’t seem to find anyone you’d be willing to have sign a lease? Maybe you need to re-evaluate your best practices.
Former homeowners are struggling to find places to rent because of their bad credit, past foreclosures and bankruptcies.
These are issues to be concerned about—but when 1 in 3 applicants have faced some sort of financial crisis in the past years it seems unprofitable to turn potential renters away when there are other ways to determine an applicant’s financial stability.
Here are four things to consider:
1. – Look for other indicators of financial stability
Ask for copies of recent car payments, utility payments, and ask for a copy of their most recent pay stub. Determine if their income is high enough to cover the cost of renting your space. Consider the cost of utilities if they aren’t included and any other fees they might be paying like a pet fee, HOA fee, or maintenance fees. And don’t forget the cost of living. You know what it takes to support your lifestyle. If they make enough cash to cover the rent/utilities and cost of living they might be perfectly good tenants.
2. – Ask for a larger security deposit
This is becoming a very common practice. Create a standard that requires potential renters to pay a larger security deposit if their credit score hits below a desired average or they’ve had recent financial woes. Explain to the applicant your concerns and make it clear the larger security deposit is a non-negotiable. Being up front with applicants saves you both time and money. Be sure to check your state’s rules on deposits.
3.- Require a co-signer
Asking an applicant to enlist a co-signer is fair, especially if you are concerned with their financial stability. Make the terms of the co-signer agreement clear to both parties and consider having them pay a larger security deposit. Sometimes having more than one person to be accountable to makes paying your rent on time much easier.
4. – Check references
Call employers, past landlords and other professional references. Make sure the person you might rent to gets the seal of approval from the people who know him/her best. A happy employer and happy former landlord is an indicator of a good applicant.
Renting to an applicant who has less than stellar credit doesn’t have to mean panic. Sometimes there are ways to work with an applicant that meets the rest of your standards. Just be sure you apply the same set of rules to all applicants.