Life is full of seemingly impossible demands. For instance, getting your first job without any experience — because no one will give you a job just to get experience, right? Renting an apartment with no credit history can be equally frustrating, mostly because you just paid cash for everything up to this point and don’t necessarily have a bad credit history hanging over your head.
Lucky for you, there are several ways to overcome this obstacle. They won’t work with every prospective landlord or building manager, but sooner or later, you’ll strike a deal and and find yourself moving into a nice new home.
Plead Your Case
Describe your situation honestly and simply, and be sure to make it look good. If you’ve lived at home up to this point, portray yourself as hardworking and practical, with parents who need your help with housekeeping or child care rather than a freeloader or perpetual child. Mention big-ticket items you’ve purchased with hard-earned cash such as cars or furniture, and present receipts or show proof you’ve helped pay for college on your own. Gather character references from educators, employers, clergy, and anyone else who’s not related to you that sing your praises and say what a great, reliable person you are. Make copies of the reference letters so you can hand them out freely. Last but certainly not least, you’ll want to provide proof of employment with payroll stubs or tax returns.
Show Them the Money
Money talks in many cases. Make copies of your last three bank statements to prove you have sufficient income to pay rent. If you have a savings account, provide documentation of your current balance. Be aware that your monthly rent should not exceed one third of your monthly income, so if the rent is $1,000 a month, your take-home pay should be at least $3,000 a month.
If you can swing it, you should also carry $1,000 cash with you during the apartment hunt so you can instantly put down a deposit to secure a place. Just make sure you get a written receipt before you leave the premises if you do, and that it’s signed by the person you gave the money to. You can also offer to pay two or three months rent up front or a hefty security deposit to convince them you are financially solvent and put their mind at ease.
Find a roommate who has good credit history. Many landlords will waive the need for your credit history if your roommate’s is impressive enough. Of course, this is easier to set up with a friend, but you may find someone agreeable to those terms via an online roommate finding site, too. It always helps if you can bring something appealing into the deal like a big TV, major kitchen appliance, cooking or cleaning skills, etc. If you can find an apartment you like with an established tenant, that may solve your problem for the time being — but you should start building a credit history with a prepaid credit card issued by your bank right away.
In cases where an apartment complex has more than one unit vacant, you may have an advantage when it comes to negotiating terms. Empty apartments cost landlords and property owners money in the form of meeting mortgage payments and covering utility and property costs. If you make a great impression, verify a steady income source, and can move in immediately, a landlord may cut you some slack and forego a credit check just to fill a vacancy quickly.
Another negotiating tactic is to ask for a shorter lease. A landlord may be wary of signing a 12-month lease with someone with no credit history. Suggest a three or six-month lease to be extended at the end of the period if you pay your monthly rent in full and on time, or even early if you can handle it. This set up builds good faith between both parties and is ideal for people with no credit history.
Smaller complexes are more likely to be owned and operated by an individual than larger ones. These landlords aren’t bound by rules and regulations often stipulated by management companies. Once you find one, you should be able to easily find out (usually at no cost) who owns the property so you can proceed more quickly and avoid asking the landlord if they are the property owner.
Co-Signer: A Last Resort
Using a co-signer to rent an apartment is often an easy option. Parents, siblings, other relatives and close friends may even offer to co-sign for you, but beware of the pitfalls. If you default on your rent payments, the co-signer is legally bound to pay your debt, which can cause bad blood that isn’t easily washed away. This legal liability can also damage the co-signer’s credit score if the landlord sues or attempts to evict you for any reason. In short, just make sure you know exactly how your lack of responsibility could potentially hurt someone who put their faith in you.