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jordym84's avatar

How do I explain my bad credit?

Asked by jordym84 (4737 points ) December 6th, 2012

I recently relocated to another state in the US to pursue my career dreams. I’ve been staying with two of my really good friends and they’ve been a great help these past two months. They want me to stay with them until their lease is up in May and the three of us can get an apartment together, to which I’m not opposed. However, another friend who lives in the same apartment complex is moving back to her home state for a better job opportunity and has asked me if I’d like to take over her lease, which also ends at the same time as that of the friends with whom I’m staying. I’m really keen on this idea as I’d be able to have my own space and pay my own bills, as opposed to sleeping on my friends’ sofa bed.

The problem is, I have pretty bad credit due to some poor financial decisions I made while in college, in addition to owing just under $40,000 in federal and private student loans, which I haven’t been able to pay since I graduated last year due to my family’s (and my own) extreme financial difficulties. I’ve made arrangements with my lenders to postpone my loan payments until March of next year, as by then I will be more financially stable (I finally got a job in my area of study and will be starting before the end of the month).

With my application for the apartment, I have to:
-Submit proof of income (it has to be at least three times my share of the rent)
-Undergo a credit check
-Have prior rental history (not mandatory, but since I don’t have any, they will most likely make me pay an additional security deposit)
-Have a guarantor if any of the above criteria is not met and/or is unsatisfactory.

Besides having poor credit, I won’t have proof of income yet because I don’t start the new job for another week or so and the application has to be in soon because the lease starts on January 1. Additionally, I don’t have a guarantor because my parents are also having financial difficulties and don’t meet the qualifications for guarantors and I don’t know anyone else who would be willing and/or able to do this for me.

I know this all looks really bad, but despite my financial situation, I have become very financially responsible and haven’t defaulted on any other financial responsibilities that I now have and, with my new job, I will be making more than enough money to be able to pay my rent and other bills on time.

On the application form, it says to write a letter explaining any past credit problems I may have. I’ve never had to do one of these before, so I was wondering if the collective would be able to provide me with a few guidelines of what to include in the letter and how to best present myself (and my finances) in a way that will assure the management company that, despite my poor credit history and other financial issues, I am trustworthy and will not default on my rent payment?

Thank you in advance!

I’ve never talked about my financial situation with anyone before and I feel really anxious opening up about it, even though no one here knows me personally. This situation has been keeping me up at night and sometimes I get so anxious that I feel as though I’m suffocating. I can’t help but feel like my financial situation is holding me back big time from starting a life of my own because my credit score haunts me =/

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6 Answers

Coloma's avatar

All you can do is be honest and hope for the best. In all the years I rented I always secured places primarily on being honest and likeable even if my credit wasn’t perfect. That’s about all you can do on such short notice. Money talks and if you could possibly offer say 3–6 months advance rent, that would definitely get their attention. Good Luck!

jordym84's avatar

@Coloma thank you! I’m definitely going to be honest with them and I do have an easily likable personality, but I’m still afraid that that might not be enough. If only I had the money to make several months’ worth of advanced payments…

bob_'s avatar

Your best bet is to be completely honest and hope that they’re reasonable. Some places just won’t budge at all. I had a place turn me down because I couldn’t find a guarantor the way they wanted it, despite the fact that I have perfect credit, proof of income and offered to pay six months of rent in advance. True story.

CWOTUS's avatar

Personally, if I were you, I’d continue to sleep on the sofa bed in my friends’ apartment and be damned glad that I had such great friends. And in the meantime I would be paying off every debt that I could possibly pay, as soon as possible, and early if possible.

You don’t have the job yet, and you don’t know what might happen during any probationary or learning period – or what will happen to the company during the next year, especially given the uncertainty on the national financial scene.

So delay your dream of independence, keep your powder dry and pay off those debts while you support your friendly apartment-mates by paying your share of rent and board to them in full and on time. Your time will come, but you don’t want to be premature. Be smart instead.

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