Renting With Bad Credit – You are thowing money away!
Anyone with bad credit should expect problems receiving a loan. The bank manager worries that giving a loan to someone with low credit. They may default or delay payments.
Owners of rental apartments often want to know credit ratings before making the rental agreement. They do not wish to find themselves with a tenant who cannot pay rent. They also don’t care for the hassle of chasing late rent payments. Similarly, car rental companies worry about doing business with people who have bad credit ratings. Rentals for someone with bad credit will be harder to find and more expensive to take on.
The Apartment Rental Costs of Bad Credit
People with bad credit ratings need to rent apartments, but their choices are limited. Large property management companies often refuse to rent apartments to anyone with a FICO score below 630. This forces people torent from private landlords. Private landlords can also refuse bad credit renters. Others agree to rent if the renter pays an extra fee. Sometimes these additional charges are described as ‘risk fees’. Depending on the view you take, the apartment owner can take advantage of the renter with credit problems or try to safeguard their interests.
Rental risk fees take different forms. Sometimes the apartment owners asks for a two month rent advance from a bad credit renter but would take a one month advance from someone in good credit. They might also demand a higher deposit on the apartment, or put up the monthly rental. They have the right to demand all of these risk fees and additional assurance, like a co-signer on the rental agreement. Competition for a restricted number of available apartments also pushes rent upwards. This compels people with low credit scores to pay significantly more for rental apartments.
Renting a Car on Bad Credit
Car rental companies are particularly keen to find the credit ratings of customers who want to pay with debit card or cash. In addition to the usual concern to ensure payments are honored, they worry what happens if the driver damages the vehicle. In these situations, they lack means to recover their losses. If the credit check shows bad credit, they only agree to rent the car with a cash deposit or credit card payments. They might ask for as much as a $500 cash deposit. If the customer cannot meet these terms, they must look elsewhere. This often requires settling on a more expensive car rental with a limited vehicle range. In addition this, the disappointed driver faces the inconvenient and often time-consuming search for other rental options.
Bad Credit Situations are Renter Unfriendly
Compare the rental apartment and car rental experiences of a person with a low credit score against someone with a great FICO score. In both cases, the low credit scorer has fewer rental options. They also frequently pay more to rent the same kind of apartment or car which someone in good credit finds easily. There are ways to make life a little easier; for example, the apartment renter on bad credit could find a room-mate. The apartment owner is happy if one of the two renters is in good credit. However, these strategies don’t suit everyone. It is much better to work on reducing credit card debt and making sure loan payments are made promptly. As personal credit improves, a varied and less expensive range of rental options open up.