Looking to place a tenant with poor credit

10 Replies | Chicago, Illinois

Hello Everyone,

For quite a while now I've been working with a client who wants to lease an apartment on the south side of Chicago.  She has credit issues (score unknown) and is self-employed.  She lives with her mother currently, and I think they both would like for her to get her own place.  According to my client, her mom will "co-sign" on a lease, but in my experience landlords are interested in the credit and income of the adults who will actually live in their apartments, so a prospective tenant having a supportive mother doesn't impress them.

Can anyone offer suggestions for this client, aside from getting her credit cleaned up?

Thanks,

Shawn

You leave out the most important facts: W-H-Y is this woman's credit bad? Medical bills is one thing, and a landlord will be more amenable to help someone who has some chronic condition that left them broke. Irresponsible borrowing shows a lack of discipline, and no landlord wants that. Carries over into lifestyle and behavior too often. As for "self-employed," we all know that's code for "unemployed." Can she show you her income taxes or statements?

Wait....you're representing her, can't find her a place because of her credit score, but YOU don't know what her credit score is? Aside from that info, maybe it's just a Chicago thing, because around here a co-signer works just fine, as long as that person can meet all of the requirements. I had a soon to be ex-husband that was willing to co-sign for his soon to be ex-wife. As for her being self employed, she will most likely need to provide 2-3 years of tax returns to prove she's actually made any money. 

What’s poor credit? I’ve got several tenants with credit scores in the 500s and they’ve been great

@Shawn M Hannan having her past two year's of schedule E's available would probably help. Self employed is not something we land lords like to hear, especially when pared with poor credit! If you can at least provide the income verification up front that would probably help. I also would recommend pulling her credit so you actually know what you are dealing with before you as the agent waste too much more time driving around!

@Shawn M Hannan

" Score unknown" is probably because she never owned a credit card which is interesting to me. Having the mother cosign is great but I wouldn't put an emphasis on it, she sounds like a risky tenant and unless finding qualified tenants in your market is challenging I would hold off on this one. 

Good luck

People rent on the South and West sides because they can't afford or qualify to rent in better areas. This comes with the territory of renting in those areas. 

I don't see a simple solution. If her credit is poor or not good, she would at least have to have someone move in with her with really good credit and income. So unless her mom is moving in with her, I wouldn't do it.

When I moved into an apartment with my dad. I had poor credit but good income and cosigned with my dad who at the time had OK credit and lower income. The reason for the co-sign however was because his income alone wasn't enough, I had the higher paying job and he was retired so our combined income got us the lease.

Every landlord is different and its ultimately up to you. If you do it, at least make sure their deposit is high enough, just in case.

Thanks to everyone for their input.  The idea of getting her tax returns is closest to what I was aiming for, which was to understand what this person will need to do to get a place despite her credit history.  I'm sure there are many people in Chicago with lousy credit histories who aren't homeless.  Thus there are landlords out there who take in tenants with bad credit.  The question is under what circumstances they'll do that.  Again, going back to my original post, in my (admittedly limited) experience, landlords qualify or disqualify based on the credit score of the tenant(s), so having someone with solid credit who's willing to co-sign counts for nothing.  But there may be landlords who would offer a lease in this situation, or in this situation so long as the tenant puts up a double security deposit, or in this situation so long as the tenant shows two years of tax returns and the rent-to-income ratio is X% -- or whatever the criteria may be.

I even came across https://www.guaranteedapartmentapproval.com, but wow, that's a very expensive proposition ($150/month + $1000 every lease term + ...).

Thanks,

Shawn

@Shawn M Hannan

Besides providing the applicant's tax return, here're some ideas

1. Offer higher rent to landlords

2. Offer to put down more $ for deposits

3. Have friends or families write letters of recommendations. Make your client stand out.

 Like you say, there're landlords who will rent to tenants with lousy credit. It's a numbers game. 

However, since you're helping her, I'm assuming you're also charging the landlord at least 1/2 month's rent if it's not on the MLS.

Some landlords might not want to pay that if they list it themselves, so you would have to figure out compensation with your client. 

You keep saying she has bad credit but you don’t say how bad or what’s causing it which makes it relatively useless to just say she had bad credit.

My PM company has minimum credit score or 525. For most people that’s bad credit. I’ve got tenants with 550 credit score. No issues. What matters to me is why is it low, no criminal history and no past evictjons/judgements. Stuff like unpaid cell phone bills or medical bills are much less important