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Having a good credit score is not only essential to securing loans like a car loan or mortgage but when renting an apartment as well. Landlords rely on credit scores as a tool to assess how big a financial risk they are faced with if they choose to rent to you. 

Your credit scores often play a huge role in your ability to secure an apartment, in fact, some landlords won’t accept your application if you have bad credit, even if you have a decent income and good references. 

Luckily, there are actions you can take to increase your chances of finding a good apartment despite having bad credit. 

How To Rent An Apartment With Bad Credit

Although bad credit may diminish your chances of finding an apartment, these steps will help you focus on other aspects of your rental application to improve your candidacy as a future tenant. 

Find An Apartment That Requires No Credit Check

Most ads for apartment rentals demand three things from you: credit score, proof of income, and references. However, there are some landlords who will only ask you for proof of income and references. These are the landlords you want to look for. 

Oftentimes, these are not landlords from property management companies that run big apartment complexes. Those organizations are often more strict in their requirements from prospective tenants, and thus will require a strong credit score from you.

However, finding an individual or partnership owner of a unit increases your chance of finding a landlord that will consider an application without a credit check. It’s important to note that you will often need to compensate in other ways to encourage such a landlord to take this risk. Be prepared to have a solid source of income that you can prove, as well as strong references. 

How To Find No Credit Check Apartments

There are a few possible avenues that can help you find a landlord who will consider your application without a credit check:

ONLINE PLATFORMS 

There are various online platforms where individuals can post ads for new tenants or roommates. Craigslist and Kijiji are popular examples where you can find rental listings for apartments, condos, townhouses and houses. Facebook Marketplace also hosts many groups specific to tenants looking for rental units, as well as neighbourhood groups that sometimes advertise specific rental units in that particular area. 

Check out these 10 mistakes renters make.

REAL ESTATE AGENTS

Real estate agents are a popular tool for prospective tenants looking for a place to rent because they do not charge to find you a place (their fee is paid by the landlord). Landlords, especially individual homeowners, commonly use real estate agents to help navigate the tenant market and to handle all of the paperwork. 

Once you find a real estate agent, make sure to ask them to show you listings that do not require a credit check, or to tell you about listings that they think have owners that could be swayed without a credit check if you have a high income, for example.  

Pay In Advance or Increase Your Rent Offer

If you’ve managed to find a landlord willing to relax their tenant qualification of a credit check, it’s likely they might want something in return. You might need to make your application more appealing in a different way, which can include paying a few months in advance or increasing your offer of the monthly rent. While it is illegal in Canada for landlords to ask for security deposits or months of rent in advance, you are within your rights to offer more with your application.

If your budget can handle it, you might be able to secure a unit by offering an extra 30$ of rent each month, for example. Or, if you have enough savings, you could try to sway the landlords with 3 months of rent upfront instead of the first and last months. Using a financial incentive to make your application more appealing can help landlords feel less concerned about your bad or lack of credit. Actions like these demonstrate your commitment to the unit, and can actually help them out if they were short on cash this month. 

Learn how to create a monthly budget.

Use A Cosigner Or A Guarantor 

Sometimes, your own history and application just won’t be strong enough for a landlord. Especially in larger cities, competition between tenants can be fierce; so, you’ll want to consider all possible ways to strengthen your application. 

Having a cosigner or guarantor should be a last-resort idea; however, it can sometimes make or break a rental application. If you choose this route, you’ll need to ensure your cosigner satisfies the necessary credit qualifications. Trusted friends and family members are good candidates for cosigners. They should be someone close to you, as they will need to assume some sort of risk in agreeing to cover your rental payments if you happen to default on your rent. 

Improve Your Finances 

Improving your finances is an important step in strengthening your rental application. To demonstrate a strong financial history, you’ll want to demonstrate the following:

  • Stable job – A stable job can be proven with recent, consistent pay stubs demonstrating your bi-weekly income.  
  • Debt-to-income ratio – If you have enough income to pay for your rent, other debts and living expenses with ease, you’ll want to demonstrate this to your prospective landlord. You can calculate your debt-to-income ratio and add a printout of it to your rental application. 
  • Savings – Despite having bad credit, a cushy savings account shows landlords that you have a sense of financial responsibility, which can save you in case your income becomes insufficient to pay your rent.

Provide Solid References 

Similar to a job or loan application, apartment rental applications can benefit from having references. Landlords often ask for references as a requirement of the rental application. This is a good opportunity to mitigate the effects of a bad credit score. There are two types of references you’ll want to use for a rental application:

Rental References 

Many landlords may ask for a rental reference. These references can really help your candidacy as a tenant if you’ve had a good relationship with your previous landlord. Future landlords may use these rental references to contact your previous landlord in order to gauge what kind of tenant you were. These references can provide them with information about how responsible you were with the rent payments and if you were a good tenant overall.

Credit References

Credit references are from people who have had a financial relationship with you. These references can speak to your sense of financial responsibility. Some examples include your bank, previous landlords, employers, or business partners. Before using a credit reference, make sure you have settled most if not all of your debt with the person you are asking for the reference from. 

Character References

To strengthen the reference section of your application, you might want to consider adding a character reference. These references help vouch for your character and humanize you to a landlord. A family friend, client, co-worker or past employer are all good options for a character reference. 

What Landlords Look For On A Credit Report

We know that landlords check the credit reports of potential tenants, but what exactly are they looking for? 

Payment History

Landlords will check your credit report to review your payment history and habits and to determine if they can trust you to pay your rent each month on time.

Debt Levels

Landlords may check to see how much debt your carry and how many different credit accounts you have. High levels of debt, especially consumer debt, could be a red flag for certain landlords. A lot of debt can make it hard to keep up with rent payments. 

Delinquencies 

Bankruptcy, accounts in collections, and other black marks may prevent a landlord from approving your rental agreement. Certain landlords may feel that these delinquencies make you an untrustworthy borrower.

Renting With Bad Credit FAQs

What is the minimum credit score for renting an apartment in Canada?

The exact score you need to rent an apartment will depend on the landlord and the rental market. Competitive markets may require higher scores. In general, a credit score of 660 or higher is considered good. Renters that have scores above 660 should be able to rent the apartments they want. 

Can I rent an apartment with a collections account on my credit report?

This depends on the type of account in collections, how old the account is, and even how much you owe. Each landlord will evaluate your credit report differently. 

Is it easier to rent a house or apartment with bad credit?

Having bad credit can impact your ability to rent any type of dwelling. If you have bad credit, offer to pay upfront, provide solid references, or ask someone to cosign the lease.

Final Thoughts

Having bad credit can pose some problems in finding a rental unit. The good news is that there are many mitigating actions you can take to help a landlord recognize your worth as a decent tenant. With strong proof of income, personal references and appealing negotiation of rental costs, you can offset the effects of your bad credit score in no time.

Chrissy Kapralos avatar on Loans Canada
Chrissy Kapralos

Chrissy is a Toronto-based communications advisor. With an English degree from the University of Toronto and editing courses under her belt from Ryerson University, she has continued her lifelong passion for writing and editing. In addition to working for Loans Canada on a variety of financial topics, Chrissy has a few years of resume writing and editing under her belt, and takes great pleasure in helping people find work that fits with their experience and passions. When she isn't working, you can find her practicing yoga, hanging out with her dog, reading up on financial and real estate news, or planning her next trip abroad.

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