How to rent a house when one of us has bad credit
January 4, 2016 4:51 AM   Subscribe

My husband and I have been living in a 1 bed apartment for 2 years, and for the sake of our marriage, we need to move somewhere bigger. We're looking to rent for the next year or two at least. I have a good credit record but my husband doesn't (his credit score is around 600, he has around $5000 in medical debt in collections dating back to a period 4-5 years ago when he was uninsured). What are our options?

(I apologize for the brain dump below - I'm just trying to preempt questions as I'm posting anonymously...)

We live in Portland, Oregon, in a very competitive rental market. We're looking to rent a house rather than an apartment.

1. Can I be the sole applicant?
2. If so, can my husband still be on the lease? Even as an occupant or something? With a background check but no credit check, for instance?
3. Given that we're married and therefore liable for each others' debts, will it matter that his credit record is bad if mine is good?
3. Can I be his co-signer, if one is needed?
4. Is there some law that says that you can't refuse to let a spouse live with a tenant? I've read a few articles online that suggest this, but I'm not sure how Oregon law works in this area. Our current lease is very clear that only people who are on the lease are allowed to live in the apartment.
5. Is medical debt treated less harshly than credit card (or other) debt when assessing risk for rentals?
6. We can offer a higher security deposit or additional months' rent up front - will this make a difference? Or only with private landlords?
7. And if the answers to the above are "it depends", what does it depend on?
8. Bonus question - what can we do to maximize our chances of getting approved for a rental?

My husband's credit score is somewhere between 590 and 620 according to creditkarma, and improving every month (we have a joint credit card and auto loan, he has no other open lines of credit apart from his student loan which is in good standing). The reason for the poor score is a period 4-5 years ago when he wasn't insured and incurred around $5000 of medical debt which is in collections (over 8-10 accounts). There was also a judgment (for additional medical debt from the same period) which we paid off nearly a year ago, although that's still on his latest credit report, so we know that we need to figure out how to get that showing as paid. But the medical debt in collections is still there.

I have a high credit score and my income alone is greater than 3x the rent of the places we're looking at. Applying alone would be fine as long as there isn't a clause in the rental agreement that says that only people on the lease can live there (and my limited Oregon experience suggests that that's a standard clause - I'm happy to be corrected though!).

Neither of us have any felonies, evictions, or any other bad stuff - it's only the medical debt and associated impact on his credit score which is a potential issue.

We're looking for a 2-3 bedroom house with some outside space and a garage or basement or storage space. We're a married couple in our early 40's with no kids or pets. We both have steady jobs. We're looking for a home - so we want to look after the garden / build a vegetable patch / paint rooms (with landlord approval of the color scheme) / keep the place nice. We're ideal tenants!

Our current apartment situation isn't ideal. When we moved in together just over 2 years ago, we took over the apartment that my husband's mother had been living in. My husband applied in advance to go on the lease, but his application was rejected (this was before the judgement was paid off, and before the joint credit card and auto loan were on his credit record). I applied and was accepted. She moved out and we moved in, and a couple of months later my husband's mother came off the lease. The apartment manager was completely fine with all of this - in fact he encouraged us to do it this way. Even though the terms of the lease are that every adult who lives in the apartment needs to be on the lease. He knows that we live here together - not only do we see him around the apartment complex, he's friends with one of my husband's co-workers, so we see him socially too. We're good tenants - we pay rent on time, we keep the place nice, and we don't cause any trouble. The apartments are owned by a big faceless property management company. So we'll have to get a rental reference from him rather than the property management company, but that shouldn't be a problem. (Well, I can get a reference from the company but my husband can't)

Getting rid of the remaining medical collection debt is something I would love to do, but that's not going to happen quickly. Not because of the money, but because dealing with it is something my husband finds very difficult emotionally, and I can understand that. Even just viewing his credit report triggers memories of the bad experiences that he went through that incurred them.

Staying in this apartment for more than a few more months is not an option. We're not in a position to buy right now. We need to move - we just need to figure out how. Thank you in advance for your advice and suggestions!
posted by anonymous to Home & Garden (21 answers total) 3 users marked this as a favorite
 
Just as an aside, many lenders / landlords / others who pull credit reports will put medical debt in a category of its own and not give it the weight that other delinquent debt would have.
posted by megatherium at 5:18 AM on January 4, 2016 [1 favorite]


Generally speaking, there typically aren't laws that govern what happens for credit scores on rental applications, outside of a bad credit score being a legitimate reason for a landlord to reject an application (in states with stronger tenant's rights laws). Therefore, the short answer to your question is generally that your credit score matters in asmuch as your potential landlord is willing to accept, and is a factor that a landlord can take in judge you against other potential renters.

Apartment complexes typically will have property management companies that may have standing policies as to how to judge the strength of applications and may have blanket policies regarding credit scores, but this varies from company to company, and again, may be flexible. A single owner landlord of a house rental may be more flexible as well.

Tldr: you're likely better off coming clean with both names and credit scores and a good explanation/showing of why you're not a bad risk due to your husband's credit score.

With the caveat that landlords may vary on their own preferences for applications - to answer your questions in order:

1. Can I be the sole applicant?
Typically landlords like to have all residents of the house on the lease. This is a risk management strategy for the landlord, as the more people on the contract, the more people he/she can go after in the case of a failure to pay. The application process is typically just telling the landlord "here's all the information of everyone we are proposing to be on the lease agreement"

So while the answer here is a yes, it doesn't necessarily help make your application more competitive, and certainly a smart landlord wouldn't allow you to factor in your husband's income in the line where it asks for your household income. But again, obviously it differs from landlord to landlord, see your current leasing situation for example, although I read that as a property manager helping you get around his company's policies.

2. If so, can my husband still be on the lease? Even as an occupant or something? With a background check but no credit check, for instance?

See question 1. In most situations, everyone on the lease agreement gets a credit check. You could potentially set up a potential situation of setting up a sublease agreement to your husband, but that requires 1) You acquire a lease with only your name, and 2) the lease agreement allows you to sublease - and in most contexts, subletting clauses have potential subletters subject to landlord approval.


3. Given that we're married and therefore liable for each others' debts, will it matter that his credit record is bad if mine is good?

This isn't always true. In separate property states (i.e. Oregon) spousal liability tends to be limited to debts where spouses have co-signed. Otherwise debt incurred separately is considered to be separate. Again whether it matters or not is up to a landlord's specific preference.

3. Can I be his co-signer, if one is needed?
The process of signing up with both of your names on the lease agreement is, in effect, co-signing. The idea is that the landlord can hold any person on the lease agreement responsible for the whole amount of rent due.

4. Is there some law that says that you can't refuse to let a spouse live with a tenant? I've read a few articles online that suggest this, but I'm not sure how Oregon law works in this area. Our current lease is very clear that only people who are on the lease are allowed to live in the apartment.

I can't speak to this, but I think this is overthinking it. A smart landlord will require everyone of age living in the apartment on the lease agreement, spouse or not. I'm unaware of any laws in the states I've worked in that specifically allows spouses to live in an apartment rented by the other spouse without consent of the landlord.

5. Is medical debt treated less harshly than credit card (or other) debt when assessing risk for rentals?
Depends on the landlord, but generally yes, it's considered less of an issue. You may be asked or want to explain the situation around this.

6. We can offer a higher security deposit or additional months' rent up front - will this make a difference? Or only with private landlords?

Depends on the landlord. It's certainly something I would keep in my pocket (or in the contexts of highly competitive markets, up front) to offer it if a landlord expresses skepticism regarding the credit score.

7. And if the answers to the above are "it depends", what does it depend on?
On landlord preferences. Some might be more prone to understanding your situation, and see a good faith effort of making a competitive application (we're working on fixing the score, here's extra months' security deposit, the score is only on medical debt, not credit card debt, here's our monthly income and proof thereof, here's our letter of recommendation that we have always paid on time in the past several years and that we're good tenants). Other landlords might have been burned with people with bad credit scores and have a blanket refusal of such applications. Still others might fall in the middle and consider your application, but take another application with all factors equal except for a better credit score.

8. Bonus question - what can we do to maximize our chances of getting approved for a rental?

In addition to the recommendations in 7, in the tight housing markets I've lived in (SF and DC), the best applications were ones where during open houses, the landlord was able to meet all people living in the household and on the potential lease. Application was ready to go and submitted, with copies of EVERYTHING - credit report, checks for application fee, checks for rent and security deposit, (as required by the landlord), pay stubs, letters of recommendation, etc. all neatly arranged and attached together. Make it as easy as possible on the landlord so he doesn't have to do additional legwork. Some even had an elevator pitch/cover letter giving your background and explaining why you're good tenants. You can get a free credit report to attach on annualcreditreport.com; for credit scores you'll typically have to pay, but I haven't had a landlord who's required a credit score, just a credit report.
posted by Karaage at 5:40 AM on January 4, 2016 [4 favorites]


I have not been in your specific situation, but I have found that individual landlords (meaning a person who owns a one or a few rentals) have been able to be flexible, whereas the big property management companies have been completely rigid. I've dealt with this for things like pet policies and length of leases, not credit, but talking with an individual landlord was as simple as making a human connection, while talking with management companies met a total wall. (The other side is that in my experience individual landlords are the worst about maintenance and building codes, so this cuts both ways.)

In your situation I think I'd try to word it as "I'm the main bread winner and we are using my income and credit for the application. My husband is fine with being on the lease, but his income and credit aren't as strong as mine, so please consider me the primary applicant" -- in other words, to phrase it as a positive, not a negative, if that makes sense, and then highlighting all your positives such as rental history, ability to pay a deposit, and commitment to keeping the place nice.
posted by Dip Flash at 6:01 AM on January 4, 2016 [6 favorites]


I had absolutely terrible credit before I rented my house, because I lost a job, had a flood, and eventually walked away from a mortgage. I wrote out the entire story of what happened and gave it to potential landlords when I filled out my application, letting them know I'd be happy to give a larger deposit (a couple of months) and not one of them refused my application. I think that, in this economy, landlords are looking more for good, solid tenants than people with absolutely spotless credit, unless you're in a highly competitive market and/or you're working with bigger property companies.
posted by xingcat at 7:07 AM on January 4, 2016


I have always picked tenants more on personality and attitude then credit check. Spotless credit does not indicate a good renter. The one time I went by credit I ended up with a guy that pasted aluminum foil all over the wall and took out all the light bulbs.
posted by Marinara at 7:24 AM on January 4, 2016 [6 favorites]


Even in high-demand markets like Southern California, I have not had any trouble renting houses (*with* big dogs even) by writing a cover letter. I acknowledge that we have a foreclosure, I explain how we keep the dogs from eating the house, I talk up any special circumstances that will make us good tenants (in our case, there is pretty much someone working from home every day of the year, so the house is hardly ever left alone, plus we've had a house before so we know what stuff needs immediate attention and what's cosmetic, things like that).

And here's the thing: in a landlord's mind, if you had spotless credit and no debt, you'd probably buy a house instead of renting. Probably most applicants have some kind of debt, student loans, screwed up credit cards, whatever. If you can go in with a cover letter saying "hi, we're boring married people with some medical debt, my husband's credit is recovering, we are not the kind of people who are going to throw raging keggers in your house" you're going to be better off than some/most of your competition. Also dress up some for any in-person meetings, be friendly etc.

Medical debt is definitely regarded differently, more like student loan debt. Getting sick isn't considered irresponsible in the way that screwed up credit cards or whatever is, and pretty much everyone knows that medical debt will mess up your credit.
posted by Lyn Never at 7:45 AM on January 4, 2016 [2 favorites]


Agreed with the advice to create a cover letter/story that highlights the good (high income, good credit on your end, good references, no pets) and acknowledges the bad, which is really not that bad. I think landlords who have been burned are most put off by people who seem to have something to hide, if you're honest and can communicate well you'll likely be fine. Try not to come across as desperate or anxious about moving as it will be a flag to a landlord who has had horrible tenants in the past. If you're not planning to move for 1-3 years you could agree to a longer lease term, that is attractive to some landlords (others will worry it'll mean they'll have a harder time if they need to evict you).

I've rented my whole life from private landlords and have convinced landlords to agree to renting to my bad credit/low income parents by being honest/up front and willing to co-sign/pay extra deposits as needed, the only time it was a no-go was when the landlord thought they'd be paying too much and not be able to afford it, and I wasn't clear enough about me co-signing vs. my mom being the tenant.
posted by lafemma at 8:45 AM on January 4, 2016 [1 favorite]


Former landlord here. The thing I'm most concerned about is the likelihood of your paying rent in full on time every month. I'm also looking for whether you'll churn and move out in a year; longer-term good tenants are gold. A letter from your former manager is going to go a looooong way, especially since you've been there a while.

I read credit reports, and it is true that medical debt is so ... 1990s. It's very different from a wildly run-up credit card or continuously late payments. Medical debt is much ... easier to acquire involuntarily, and many people have it. Hopefully fewer since the ACA.

You want your husband to be on the lease, so that he builds a record going forward.

In terms of optimizing your chances: Maybe add is what your plan for dealing with the debt is. Not that I care, personally; but I don't want to be caught out when your wages start getting garnished, and you decide not to pay rent. So knowing that the debt is in a payment plan, or some similar status that things are financially stable, can be reassuring.

Also, be clear about why you're moving (which is perfectly reasonable) -- if I ask people why they're moving and they start complaining about their dickhead former landlord, well .....
posted by Dashy at 8:48 AM on January 4, 2016 [6 favorites]


When I got my apartment last February, my boyfriend applied with me because I had bad credit. His was 720 and mine was 570. We were approved no problem. His credit was enough to get us the apartment and I was a co-applicant because I was going to live there (he ended up moving in anyway).
A letter from your current landlord would definitely help. If you did for some reason get rejected, offer additional deposit. It can't hurt.
posted by shesbenevolent at 8:51 AM on January 4, 2016


I have been in this situation and in our case we smothered landlords and brokers with coherent information, so as to ensure that they understood the good as well as the bad. We presented to potential landlords a bound folder with three years of tax returns, snapshots of all bank and saving accounts, letters of recommendation, a letter from our accountant certifying our income, as well as the credit reports. This does the trick when you have a mixed bag couple where one is a garbage mess (hello, it is me).
posted by RJ Reynolds at 8:51 AM on January 4, 2016


Also, have everything you need to apply on the spot. Look organized and prepared. We went to see our apartment in the evening and applied within 5 minutes of being there. There is a list here.
posted by shesbenevolent at 8:56 AM on January 4, 2016


Yeah, I think 600 is not actually *terrible* for renting. Around 10 years ago, in a fairly competitive market (Brookline/Boston), my roommate and I were applying for an apartment and the agent advised us not to bother unless we had good credit, because the management company was known to be "very strict." My score at the time was in the mid-to-high 600s, so I asked if that was going to be good enough, and she said "Oh, anything over 600 is OK."
posted by mskyle at 9:10 AM on January 4, 2016


I agree with mskyle, when looking for apartments in NYC they were asking for 650. And it's a competitive market here.
posted by shesbenevolent at 9:12 AM on January 4, 2016


Reference letter about your husband's status as a good guy tenant, along with a good employment record, will be helpful. It's not a pretty thing about life, but credit ratings have a marvelous correlation to all kinds of other kinds of responsibility. (For example, car insurance companies have found credit ratings more predictive of claim activity than driving record.) Your husband needs to present evidence he's the exception here.
posted by MattD at 9:17 AM on January 4, 2016


I'm a landlord in the Portland area and medical debt would not be a dealbreaker for me. My current tenants are a couple where one has some credit issues and the other doesn't... they were up front with me about it, and I was fine with it with extra insurance (I normally only require first/security but asked them to front first/last/security). Just talk with prospective landlords about it, so you don't waste time with those that can't be flexible.
posted by rabbitrabbit at 9:18 AM on January 4, 2016 [1 favorite]


Getting rid of the remaining medical collection debt is something I would love to do, but that's not going to happen quickly. Not because of the money...

Your husband is actually prolonging his distress by not addressing it, and the debt is only 5k? I think you, as a clearly caring spouse, should take the lead on making the calls/looking into consolidation/mailing the checks/whatever, and then the debt shows as paid on his credit report, improving the score and making a lot of your own understandable anxiety about this rental application business dissipate.

Resolution is better for your joint situation going forward, regardless of applications. See if he lets you take this paperwork on, stressing that it's best for both of you.
posted by Iris Gambol at 10:40 AM on January 4, 2016 [3 favorites]


I pick the tenants for my father's rentals, and I don't remember medical debt ever showing up in the reports our property management firm would send over. I want people who are going to A) pay their rent on time, and B) not move out after a year. Medical debt is a lot of lower on the list of what causes A than stuff like 4 missed auto loan payments.
posted by sideshow at 11:45 AM on January 4, 2016


I don't know about Portland. I'm in Seattle.

I have had tenants with so-so credit (600 isn't that bad, and credit karma isn't very accurate), and tenants with medical debt.

First, I want to know that they are serious about paying rent on time, every time, and in full. Usually, they demonstrate this by telling me what they are doing to pay back their outstanding debt. The fact that your husband finds debt emotionally difficult would be worrisome to me. $5k is not even that much, in the grand scheme of things. And medical debt is not as bad as car loans or credit card debt. But still, I'm looking for people who want to be financially responsible.

Second, I ask for last month's deposit up front. Both as a security for me, and to show me that the tenant is able to save money.

In my case: If a tenant has good credit and the required income, then the application is approved. If the other person has horrendous credit, I would ask that person be an occupant instead of a tenant (i.e. explicitly spell it out that I don't expect this person to be able to pay the bills, and you shouldn't either), but again 600 isn't horrendous. If you need both incomes to meet the 2.5x-3x rent threshold, but one of you has bad credit, then I would want a cosigner.
posted by ethidda at 1:20 PM on January 4, 2016


Bay Area landlord here. I require applications from all adult occupants. But at the end of the day, if someone(s) else on their application team has an income 2.5x rent and has decent credit, I'd consider that good enough to pass the threshold test I apply. (If someone has bad credit, I try to qualify the team without that person's income. As a co-tenant, you're already co-signing for his half of the rent.) Another applicant might out-compete you if they ALL had stellar credit, but once you're talking about who out-competes whom, other factors (applying early, being organized, e.g.) could come into play and help.

Other ways to be competitive: show up at the first open house, or try to come before the first one. Bring a folder with your credit report, paystub copies, copies of your photo ID, and the letter of explanation. Be prepared to write a check for 1st, last, deposit on the spot. Both come to the open house. Be on time. Compliment the place. Mention your familiarity with the neighborhood. Mention your maintenance of the previous place, if that applies, but stick to non-controversial items like yard work and smoke detector batteries -- no permanent changes that would make them think "hmm, I don't know if I want you doing that here," and nothing you could screw up and cause damage. I wouldn't necessarily mention your desire to stay for a very long time until you get a sense of their situation (what if they're thinking "I'll rent this out for a year, and then when my daughter graduates, she can move back and live here once this unit is vacant again?"), but most landlords would consider that a plus.
posted by slidell at 3:54 PM on January 4, 2016 [2 favorites]


Oh, also, be careful about when and how you pay his debt. Some debts age off after some time. Making payments might restart the clock. Sometimes paying a debt gets it reported as "paid in full" (but with the history of missed payments still hurting your score), while with some debts you can negotiate to "pay for delete," taking not just the debt, but the late payments with it. (I have no direct experience, but the "improve your credit" forums are full of advice on this.)
posted by slidell at 1:43 AM on January 5, 2016


While this is less helpful for your immediate issue, do be aware that it is relatively easy to get (paid) medical collections off your credit report thanks to HIPAA. Once paid, there is no longer a permissible purpose to disclose your personal medical information to third parties, including credit reporting agencies.
posted by wierdo at 9:08 PM on January 5, 2016 [2 favorites]


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