Thinking about your credit score isn't associated with warm, fuzzy feelings—frustration might be more like it. Your credit score can stand between you and what you want, like renting or buying a home.
What is a credit score?
“A credit score is a number from 300 to 850 that rates a consumer’s creditworthiness. The higher the score, the better a borrower looks to potential lenders.” -Investopedia
What is considered good credit for renting?
A FICO credit score ranges from 300 to 850. If you have a score of 620 and below, you’re more likely to run into problems when trying to rent a home.
Why does your credit score matter?
Your credit score is a reflection of how well you manage your finances. It comes into play when you buy a car, ask to borrow money, make a big purchase, buy property, and rent or buy a home.
It might seem cruel that a bad credit score (and maybe just one poor financial decision) narrows your options, but it’s understandable when you look at it from the other side and realize that it’s one of only a few ways landlords can protect their investment.
But a low number doesn’t have to eliminate all of your options. Does your credit score matter when renting a home? Yes. Are there honest ways to work around it? Yes!
Let's take a look at some ways to find a rental even if you have a bad credit score.
Great news for military members! Do you know what the military provides? A job. One that comes with a consistent income that’s published online.
Landlords might ask to see two to three months of income to prove that you can afford to make rent payments. But in the case of military families, your previous month’s income isn’t always the best representation since Basic Housing Allowance changes based on where you're stationed.
If you lived in Oklahoma for the past two years, your income isn’t going to go over well with a California landlord. Instead, it’s a good idea to show that you’re consistently getting paid by the government, that you have orders to California, and point them to the BAH scale online, assuring them that you’ll have plenty of money to cover the rental expenses.
Photo from Canva
Since privatized military housing companies get paid directly from your paycheck, they don’t worry too much about whether or not they’ll see the money.
You won’t have to pay extra deposits or month’s rent, but you also won’t be able to save money or build credit like you might be able to do if you were renting in town in a favorable housing market.
If you don’t have the credit required to rent a home, you can always have a cosigner — someone who meets the credit score requirement and who will agree to help out financially if necessary.
Just remember that a cosigner will be legally responsible should you fail to pay rent or get evicted. As you can imagine, asking someone to cosign a lease can strain a relationship. Before you run to your friend or family, think through the negative repercussions and have a communication plan to preserve the relationship.
What better way to put their anxious mind at rest than to provide your potential landlord with references? Allow them to see that even with a less-than-perfect credit score, you’ve proven to be an excellent tenant by making rent payments, caring for the property, and communicating well with the homeowner.
A letter explaining the circumstances of your debt and how you’re working to overcome it can also help in this particular situation.
Photo from Canva
However, believe it or not, not every landlord will check your credit, so it might be best to wait and provide references and letters until it becomes a topic of discussion. Better yet, look for individual landlords, like other military members, who might be more likely to understand that your military connection speaks highly of you.
You might need to pay a larger security deposit or offset the landlord’s risk by showing up with multiple months' rent upfront. A bigger lump sum can be a difficult pill to swallow if your finances aren’t where you want them to be. However, it can offer a faster solution than waiting to build your credit score and even easier if you have a reliable person to temporarily lend you the money.
Learn more: how much rent can you really afford?
Your credit score carries a lot of weight, but knowing what yours is and how to combat the risk associated with it will do wonders. Are you ready to start the search for your next rental home? Gather your references and proof of income, then visit MilitaryByOwner's home page to start looking!