Renting When You Have Low Credit or Eviction History
Updated: May 11
When you have less than a 620 FICO credit score or eviction history, acquiring a home can be difficult. Thankfully there are many resources today to help assist with securing a home for yourself.
Get Your Finances & Credit in Order:
Clean Up Your Credit
Establish & Stick to a Budget
If Your Credit Score is Below 680, Use Debit Cards
While I firmly believe in credit cards for some, and even help my business maximize their returns on credit card spending, the majority of people lose more money than they gain by them. People tend to spend more if it’s available. If you have bad credit, I, as someone with dozens of credit cards who loves to recommend credit cards to others, suggest stop using your credit cards except <$5 transactions once a month for any accounts with no balance with automatic payments in full on any cards like that (otherwise accounts with 0 balance can get shut down from no use after a long time). I recommend shifting all of your spending to debit cards. Cash back debit cards are strong options where you can still get some rewards even though the rewards aren’t as good as with credit cards.
If your credit score is 680-740, you still may want to consider using debit cards only. Here are more cases where I recommend using debit cards even if you have 740+ credit score.
Here's how to get your free credit score (hint - it's not Creditkarma & not all scores are created equal).
Have an Emergency Fund
Have Funds for a Double Security Deposit
Establish enough funds for 3 months rent: 2 months for a double security deposit and 1 month for rent.
Avoid Bad Debt
Also I recommend avoiding taking out a loan for a car or other debt if at all possible (unless doing so would reduce the interest you currently pay), even if it means buying a $600 relatively low mileage car to replace yours like I once did. If you need to get a car, something of low cost, low mileage, high reliability ratings, & purchased in cash is ideal. In 2021, I don’t own a $600 car, but the car I own was purchased in cash w/ <70k miles on it for less than one month of my income. It still hasn’t depreciated to what I paid for it, depreciating at a relatively slow rate because it’s 10 years old. It’s a quality vehicle where the maintenance costs are low enough where it doesn’t make sense to me to get a used car warranty, though that’s an option if you currently have an unreliable vehicle. I do recommend full auto insurance coverage with a high deductible that you can cover with your emergency fund as well. Be careful of scams when purchasing a car & other used items from individuals & in some cases even from seemingly reputable businesses. I’d much prefer to put my money in appreciating assets, like home purchases & investments, than into a depreciating asset like a car.
If You Have Debt, Use the Debt Snowball
Get Educated on Taxes & Ways to Save
Get educated on taxes and ways that you can save money. For instance, many of lower income who could qualify for the savers credit are unaware of an annual 50% return essentially available at the time of this writing funded by the US government in the form of the savers credit. Travel hacking is fun if you want to travel, but it’s best accomplished once you have better credit. Non-profit and government assistance can also be helpful at times.
Increase Your Income
If you feel that your income is a problem, it’s not a bad idea to look into alternative jobs, whether additions if you have the time, improving your current income at your current employer (whether through hours, harder work, education, or otherwise), or changing jobs.
Seek Rental Assistance
Explore options for rental assistance if you think you may qualify (i.e. due to low income for household size/disability).