As you should already know, going through a foreclosure will drastically effect your credit rating. Not only does the foreclosure itself cause negative marks, but the missed payments and other legal problems leading up to the foreclosure can be enough to ruin your credit, even without the foreclosure.
If you’re a homeowner, then you probably haven’t rented an apartment in a while, but today, 90% of landlords will perform some sort of background and/or credit check. The days of meeting someone and renting an apartment the same day are virtually gone. Most landlords require a credit score exceeding 700 and income three times higher than the rent price. If you can’t meet the credit score requirements, then a higher down payment may help, but most places simply wont rent to you. Most foreclosure victims have very little money to use as a down payment and have credit scores well below 600, which makes finding a rental very difficult, if not impossible. Even if you have the income requirements, saving money for a down payment will require time, and keeping your job is much easier with a home. It’s a catch 22, you can’t get a home without a job and it’s hard to keep a job without a home.
Here are a few tips for someone who has been through foreclosure, or is having problems renting:
Be honest with the person you are renting from. They will most likely run a credit check anyway, so don’t try and hide the fact that you’ve been through a foreclosure. This can also save everyone from a lot of wasted time.
Rent from an individual, not a real estate agent or leasing company. Individuals will make a decision based on you as a person, not just your credit report. Even though an individual may still check your credit, if you’re honest with them up front, you may still get the apartment.
Always provide proof of income and a list of references who can verify your ability to make the payments as agreed.
Negotiate the rental price to make it as affordable as possible. Also, don’t assume that you have to get pushed around or forced into poor living conditions, just because your credit isn’t perfect.
If the down payment is too high, ask if they will allow you to pay the down payment over time, in addition to your payments. For example, if rent is $1,000/mo and there is a $1,000 deposit, you may ask if paying $1,250 for the first 4 months is acceptable.
If you’ve tried all the tips above and still can’t find anyone to rent to you, then there is still one more option. There are many vacation rentals or temporary housing rentals available with no deposits and no credit checks. These rentals are available in almost every area of the country and can be found using local news papers, or the Internet. I have found many of these rentals for our clients on craigslist or vrbo as well as local newspapers under vacation rentals. Here you’ll find homes, condos, and apartments advertised for people looking for a short term rental. These places are usually advertised at a much higher rate than you’ll ever be able to afford, so you’ll need to negotiate with the owner to get the best possible rate. I have found rentals that normally rent for $2,000 a week for $900 per month! The key is to find a place that is just sitting empty; the owner would rather get a little less money, rather than leave it sit empty.
Obviously, any option to avoid foreclosure, even if it means selling your home, will be better for your credit report, but if your credit has already been affected, then hopefully you can uses the tips above to find an apartment, even if it is just short term, until you get back on your feet again.