Many people can have low credit scores or no credit history, affecting their lives negatively when it comes to their applications. Whether it’s for jobs, insurance policies, purchasing cars or houses, and even renting an apartment, the chances of getting approved for any application isn’t guaranteed. However, your odds are much lower when your landlord finds out that you have no credit history or a bad credit score.
Read on to learn more about a landlord’s decision-making process to accept tenants with no credit history.
Rules Are Not Set in Stone
The decision depends on the landlord and their ability to read people. Intuition and instinct can guide you when you’re facing this dilemma. It can be difficult and you might wonder if it’s even worth being a landlord if you have to evaluate your potential tenants. However, this is a business like any other, and you have every right to deny an application if you don’t feel comfortable about renting to someone who poses a risk. Before you make a final decision, you must take every step possible that will allow you to decline with confidence. If your investigation and screening process proves that they can be trusted, then making an exception can lead to more profit every month.
Perform Background Checks
Landlords should do background checks before they decide to rent their space out to potential tenants, whether they have a good credit history or not. The credit check is just one part of a person’s background and it doesn’t indicate all the information you need. Advice from the financial advisors from MicroBilt.com suggests that criminal records, civil archives, and the department of motor vehicles should be included in a comprehensive background check. The information you get from this thorough background check will give landlords an idea of a person’s character, helping them decide accordingly during the screening process. Doing this step will highlight any warning signs or negative aspects of applicants, giving you more information than a credit report could ever have.
Consider a Legal Guarantee
There is a legal guarantee that landlords can use if they are unsure of an application. You can request for a co-signer to be on the lease with the possible tenant, giving you the protection and guarantee you need. The person who co-signs with the applicant should have a positive credit history with a decent score, so you can rest assured that your rent money is guaranteed. This is a legal way for people who haven’t established a credit history for themselves just yet to have their applications accepted. Young people have this issue, but the system allows them to ask a friend or family member to apply with them on the lease to increase their chances of approval. If a future tenant is willing to agree to this request, then they will be worth renting to.
Talk with the Applicant
Another way to understand the situation and clear some of your doubts is to talk with the applicant. Have a serious discussion with them about the lack of credit history or low score, hearing their side of the story that might sound reasonable. Any blemishes or unappealing information in their credit history can have an explanation. Hearing them out will ease your concerns, especially if their story checks out and makes sense. Communication can always make your decision a lot easier because it gives you a chance to read a person and understand their point of view. Risky applicants will always sound like they’re lying, making them untrustworthy. If that’s the case, then making a decision won’t be difficult.
Change the Lease Terms
If you still need more ways to help you decide, you can negotiate a different lease with the applicant that has different terms. Instead of having an annual or 6-month lease, you can make it a monthly one. It gives you the legal upper hand and it will make you feel more comfortable. If the first month or two weren’t good and the tenant doesn’t exhibit any good traits, then you can end their tenancy early. Changing the lease terms will always save you the hassle and it makes the process easier if an applicant has no credit history.
Every landlord is different when it comes to their tenants. Depending on the situation, landlords can choose to accept the fact that the tenant has no credit history. It also depends on several factors such as gross income and clean criminal records. The priority is safety and trust because credit history can change over time. If a tenant manages to convince you or prove to you that they’re reliable, then renting to them can be a safe choice. Having safe and smart business practices is great, but sometimes giving people the benefit of the doubt can be better.
