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    How to Rent an Apartment When You're Facing Financial Challenges

    by:
    Gursh Singh

    Whether it’s your first time leaving your parent’s nest or circumstances have you moving into an apartment later on in life, you’re bound to have questions on how to rent an apartment when you’re facing certain financial challenges. In this blog, we’ll look at four reasons why you might not be able to rent (just yet) and some ways you can remedy the situation.

    You may be wondering how to rent an apartment with bad credit, or how to pay rent when you don’t have a job. Well, you’re in good luck because we’ve got the answers! 

    Top 4 Factors Affecting Your Ability to Rent

    Over the years, some of our clients’ biggest worries have revolved around not being able to get approved for an apartment or other rental property. Here are the top four reasons for denial: Having a low credit score, poor rental history, being unemployed, or not earning enough income to afford the rent. If your rental application has been denied, remember, we’re always here to offer free advice and discuss how you can improve your financial situation.

    1. Having a Low Credit Score

    Landlords want to get paid, on time, every single month. For some, that’s their only source of income. One of the ways they might try to determine if you’ll be able to keep up with rent is to perform a credit check on you. The better your credit rating and credit score is, the more likely they are to welcome you as a new tenant. The most important items a landlord will review on your credit report are your payment habits, any declarations of bankruptcy, and the current amount of debt you’re carrying, which could affect your ability to pay rent.

    So how do you know if you have poor credit before the landlord pulls a report? Get the report yourself. You can obtain a free copy of your credit report once a year through Equifax or TransUnion, and despite what you might have heard, this will not impact your score. Your credit report won't have your credit score (you may have to pay extra to get it) but in some cases, you can access your credit score for free through your bank's app if you do online banking. If your score is low (below 600 when it comes to most rentals) there are some ways you may be able to improve it. Of course, improving your credit score takes time, so start this process early if you think you’ll be looking for a rental in the near future.

    To improve your credit, you should first prioritize your debt by following these four steps:

    1. Always make payments on time. Even if all you can do is make the minimum payment, pay it on time every single month. A minimum payment on time is better than a late payment in full when it comes to your credit score.

    2. Get current on missed payments. Missed payments can sink your credit score, but if the account hasn’t yet gone to collections, get current fast before it does.
       
    3. Pay bad debts. Bad debts include high-interest credit cards, personal loans, and car loans. Good debts are items that are expected to increase in value over time, such as mortgages or student loans (as your education will likely earn you more money in the future). While you still need to maintain these good debt payments, any extra money should go toward bad debts first.

    4. Pay debts in good standing. Some people think it’s best to pay debts in collections for a quick credit boost; not so. Debts in collection remain on your report for up to six years, whether you’ve made good on them or not. So, always keep up with your debt in good standing first.

    Of course, time isn’t always on your side, so you may just have to come clean with the landlord. Let them know why you have poor credit. Perhaps a failed business venture forced you to declare bankruptcy; a student loan got you in over your head; or a divorce left you in a vulnerable financial situation. Let them know that you’re doing what you can to make good and they may see that you’re an honest and trustworthy person.

    If your honesty isn’t enough to help you secure a rental unit, how do you rent an apartment with bad credit or no credit? You may want to try to get a guarantor (or the landlord may ask you to). Guarantors are like co-signers; it’s someone who guarantees payment should you stop paying for any reason. Guarantors may be a parent or other family member, or a close friend. You may also be able to find a no credit check apartment for rent; however, they can be difficult to find and the landlord will usually want proof of a good, stable income.

    2. Poor Rental History

    If you’re a first-time renter, you’ll have no rental history. But don’t worry, lack of rental history isn't enough grounds for denying your rental application. On the other hand, having a negative rental history can have a big impact, as this is an indicator of what the landlord can expect if they rent to you. Negative rental history may include late payments, bounced cheques, breach of lease terms, complaints lodged against you (such as noise complaints), excessive damage (anything above normal wear and tear), and previous evictions. 

    If your poor rental history is mostly due to financial reasons that have since been resolved, be upfront about them. Let the landlord know that you might have experienced some tough times in the past, or perhaps you were living with someone problematic at the time, but that you’ve since bettered your situation and ready to move forward. (And if your credit score and/or current income reflects this, even better!) 

    Having been evicted is probably the biggest red flag. Landlords may be able to find out about previous evictions based on your rental history, but not all people will be forthcoming about where they’ve lived. So, landlords performing a background check on a rental application can obtain eviction reports from services like TVS’ Canadian credit check system. It’s also getting easier for landlords to access eviction records in some provinces

    If you’re seeking a rental with an eviction on your record, your best bet is to hope the landlord doesn’t perform a background check, unless you can prove you were wrongly evicted or that a judge eventually sided with you in a civil claim. 

    3. Being Unemployed

    Any smart landlord prefers their tenants to be employed, as this provides some reassurance that they’ll get paid each month. If you’re unemployed and seeking a rental, it can be a challenge; however, sometimes it may depend on the circumstances. For example, if you’re a recent graduate that just hasn’t landed a job yet, or if you were part of a layoff through no fault of your own, the landlord may be understanding. 

    There are some things you can do to increase your rental approval odds if you’re currently unemployed. First of all, if you have good credit you can use that to your advantage, explaining that your unemployment is just a temporary setback. If you are actively seeking a job, be sure to keep a record of the contacts you’ve made, the applications you’ve filled out, and the resumes you’ve sent. If the landlord sees that you’re serious about getting back to work, they may be willing to look past your temporary situation. 

    Thinking about paying more to get your foot in the door? Paying first and last months’ rent won’t usually help, as this is often a tenant requirement. The same can be said for throwing in security deposits or damage deposits. (Deposit requirements, including security and damage deposits, can vary from province to province, so it’s best to check what the rules are in your province.) You can also ask about providing even more upfront rent deposits, for example, four months' worth of upfront rent, if of course you can afford it. But it’s ultimately up to the landlord, and some might not be willing to run the risk of having to evict a tenant who isn’t keeping up with payments a few months down the road.  

    How to Rent an Apartment if You’re Unemployed

    If you can’t leverage your good credit or upfront deposits, you may be able to get a month-to-month lease. But again, most landlords aren’t fond of these. Then there’s always the possibility of using a guarantor for an apartment rental, but many people aren’t willing to take on that responsibility in the event you can’t pay your rent. Apartment references can also be a big help, so another option might be asking former employers and landlords to vouch for your good character. 

    If none of these work, you may need to take a temporary part-time job, even if it’s a combination of Ubering and working at a coffee shop or the LCBO, in order to provide proof of employment. That part-time job might get you through the door sooner than waiting to get a job that’s in line with your career.

    4. Not Earning Enough Money

    It’s a sad truth that renting in most Canadian cities is unaffordable for lower-income earners. In fact, some studies reveal that someone earning minimum wage would only be able to afford a one-bedroom rental in 9% of 795 neighbourhoods in Canadian cities. So how do you rent if you’re in this kind of financial predicament? Unfortunately, unless you’re expecting a huge promotion or planning to win the lotto, your options are limited. 

    Again, you may want to try to get a guarantor for an apartment or other rental property if you are able to find someone willing to co-sign for you. Otherwise, your best bet is to find a roommate or to look for someone seeking a roommate. It may not sound ideal, but who knows, maybe you’ll make a lifelong friend, or they’ll help you land that dream job, or they’ll introduce you to the love of your life! 

    If you don’t mind dorm living, there are many young Canadians who have been priced out of single-bedroom apartments and instead embraced communal co-living. Tenants have private rooms but share common spaces, like the kitchen and living room. This communal-living approach may be the future for millennial and Gen Z renters looking for affordable, big-city living—at least until they get that next big promotion.

    How to Pay Rent if You Don’t Earn Enough

    If you refuse to room with someone else or bunk in a new-age dorm, you may need to consider a second job or renting outside the city and commuting each day. Studies show that more and more Canadians are now living outside city limits and making long (long) commutes in order to afford the cost of living. That may be an option if the cost of the commute (and your personal time) doesn’t outweigh the savings in rent.

    Need Debt Advice or Financial Help?

    Everyone’s financial situation is different, but these are some of the most common reasons why people might find themselves unable to secure an apartment or other rental property. While maintaining a good credit score, rental history, employment, and having a stable income are surefire ways to ensure you’ll get approved, this isn’t the reality for many people, and most of us have fallen on hard times at some point or another.

    If you’d like to speak with one of our Credit Counsellors about how to rent an apartment if you have bad credit or dealing with debt, give us a call at 1.800.267.2272. All of our counselling is free, confidential, and non-judgmental. We may even be able to get you on a Debt Consolidation Program, which rolls all your unsecured debts into one lower monthly payment with stopped or reduced interest. This can do wonders to help put you on track to get the rental you want. Call us today to learn more.

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    Topics: Housing

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