How to Rent an Apartment Without Credit
This article, "How to Rent an Apartment with No Credit," was originally published on the Apartments.com Renterverse in 2018.
Passing a credit check is normally the first step in getting your rental application approved. But what if you have no credit? Everyone has to start somewhere, so don’t fret. There are plenty of ways to start building credit after you get approved for your dream rental.
Is No Credit Worse Than Bad Credit?
Renters with bad credit and renters with no credit often get put in the same group, but renters with no credit are in a much different situation than those with a low credit score. Having no credit means that your credit history is a blank slate, so you have nothing to base a score on. Having a low credit score means that you have made some financial mistakes along the way. While landlords perceive both as potential risks, a person with no credit may be seen as less of a risk than a person with bad credit.
The reason a landlord runs a credit score is to determine if you’ll be a trustworthy tenant. A person with a poor credit score may have a history of missed payments, maxed-out cards, and outstanding debts, making them seem less likely to pay their rent on time and in full. Those with no credit have nothing to prove their trustworthiness, but there are plenty of ways to win the trust of your potential landlord.
1. Bring references and proof of income
Will a college professor vouch for you? Perhaps your boss or supervisor? Whatever you can bring along to prove yourself trustworthy, use it. If you have a job, bring along a pay stub. If you have money in the bank and a steady income, a bank statement might help as well.
2. Offer to pay a larger security deposit
A larger security deposit or an additional month's rent upfront might alleviate the fear a property manager could have about renting to someone with no credit history.
3. Explain your situation to the landlord
While having good credit is ideal, having no credit is better than having bad credit. Typically, people who have no credit are young adults on their journey to financial freedom, so explain your situation to your potential landlord. With a steady job and income, your potential landlord should be less wary about renting to you.
4. Get a cosigner
If a parent, family member, or friend is willing to help, getting a cosigner is a surefire way to get that apartment. Just be aware that if you can’t pay your rent for whatever reason, your cosigner will be held responsible.
5. Find a roommate with credit
Your roommate can be the leaseholder, cosigner, or co-tenant. Whichever way you decide, having a roommate with a glowing credit history is the best way to get approved for your desired apartment complex.
6. Find a privately owned rental
A landlord who owns a small apartment building or a single-family house might not run a credit check, or they may be willing to overlook your lack of credit if they feel good about you. You can also look for rentals that advertise “no credit check.”
Ways to Build Credit Fast
Living with roommates can be a fun and rewarding experience, but, understandably, you may not want to live with them forever. So let’s get you on the path to good credit, fast. In a short time, you could have a stellar FICO score. Here’s how to build credit the right way:
Check your credit
Are you sure you don’t have any credit? It’s worth checking annualcreditreport.com to see exactly where you stand. (This is a completely free, government-mandated website. Beware of any site that wants you to pay for your credit report or asks you for a credit card.)
Aim for a high credit score
If your credit really is nonexistent, you want to aim for 750–850. This is “excellent.” Most apartment communities want a credit score of 600 or above.
Apply for a secured credit card
A secured credit card is ideal for anyone who can’t get a regular credit card because of the “no credit” problem. A secured credit card works like this: You give the bank a certain amount of cash—let's say $500. In turn, the bank gives you a credit card, and you can charge up to $500. Be sure to look at different options. Some banks might charge an application fee or an annual fee. Avoid those, because they’ll eat up the $500 very quickly. Make sure the issuer of the secured credit card reports to all three major credit bureaus (TransUnion, Equifax, and Experian). Don’t keep this card any longer than you have to, and be sure to pay off the card every month (don’t keep a balance).
Consider a credit-building loan
If you don’t want a secured credit card, get a credit-builder loan. These loans are specifically designed for people without credit. Find one with a very low, manageable monthly payment and a shorter term—24 months or less. Apply for the loan. Usually, the money is deposited into a savings account, and you can’t access it until you’ve paid off the loan. If you pay on time every month, you’ll walk away with cash and credit!
Get a car loan
Sure, you’ll most likely need a cosigner, but this is a great way to build credit, as long as you pay on time every month.
Make payments toward your student loans
Did you take out a student loan or two to help pay for college? That debt can come in handy. Start making payments on these and watch your credit score grow while your student loan debt shrinks. Make sure you pay your loans on time. If you are late or default on your loans, it will have a negative impact on your credit score.
Start Monitoring Your Credit
There are some things to watch out for while building your credit. You want to keep your credit card balances as low as possible if not completely paid off. If you have an open line of credit, you’ll improve your utilization ratio, which is basically how much credit you have versus how much you use it. If, for example, you have a $500 credit limit on a card and you owe $250, your credit ratio is 50 percent. A low credit ratio shows you use less of your available credit, which translates to you being responsible with credit and able to manage it. Keep your credit ratio around six percent, or, in this case, less than $30.
Keep in mind the utilization ratio only applies to credit cards. Car loans and other installment loans use a different rate called the debt-to-income ratio. To find your debt-to-income ratio (or DTI), divide your debt (credit cards, car loans, other loans) by your gross monthly income. So, if you make $2,000 per month and you owe $1,000 every month, your DTI is 50 percent. This number doesn’t impact your credit score (your income isn’t a factor in your score), but it’s good to know if you ever want to apply for a loan —the lower this ratio is, the better.
To wrap up: You want to establish credit. Do that by opening a credit card (but use it very sparingly) or start paying off a loan. Maybe a mix of both. But don’t open too many credit cards or get a loan with an unmanageable monthly payment, or you run the risk of being late and ruining your growing credit score. You want to find a nice, comfortable balance between income and debt.
Frequently Asked Questions About Renting with No Credit
Does my age play a role in my credit score?
No, your age does not affect your credit score, but the age of your credit line impacts your score. While nothing speeds up time, rest assured knowing that by opening your first line of credit, you’re starting your credit journey. As long as you start off making payments on time and in full, you’ll start building credit in no time. You can also be added as an authorized user to a trusted individual’s credit card to jump-start your credit history.
Is no credit considered worse than bad credit?
No, having no credit isn’t necessarily as bad as having a low credit score. Having no credit just means that you aren’t able to prove your financial reliability, while having bad credit means you have a history of making financial mistakes. As long as you start building credit the right way and make a few concessions, like paying a higher security deposit, you should be able to rent while building your credit.
What credit score are apartments looking for?
Credit score requirements are up to the property management company or landlord to decide. Generally, the minimum credit score is around 600 to 620. Any credit score above 670 is considered great, and you shouldn’t have any issues with having your credit approved.
What are my alternatives if I can’t get an apartment?
Consider renting a privately owned rental property. Look into renting out a room, renting out a condo owned by an individual, or renting through a small, privately owned rental company. A property owned by a corporation is less likely to be willing to give you a chance than an individual owner or manager.
Published October 17, 2018
ABOUT THE AUTHOR
Hi! I’m Alecia, the Content Marketing Manager here at Apartments.com. For more than 14 years, I've been helping renters find their perfect home. As part of a military family, I grew up in a variety of rentals, from apartments and houses to duplexes and condos, so I understand and appreciate what renters face when trying to find a new home. When I'm not writing, I enjoy spending time with my two sons, playing video games, and reading British mystery novels.