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Renting with Bad Credit

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The number of landowners is falling fast. According to Natalie Elphicke, a housing expert, by 2041, only 49 percent of people will own their homes. This means that in 27 years, renting will become the norm.

To Rent or To Buy

To buy or to rent is a complex argument. Owning a home is a dream for many but it is not the best option for everyone. There are some benefits from being a tenant. Buying a home comes with numerous expenses. You have to think about your mortgage repayments.

However, this is not the only thing to think about. There are buildings insurance, general maintenance, repair bills, boiler issues, and the list does not stop there. It can be expensive and long. If you are a tenant you do not have to do such expenses. They are the problem of the owner.

You can decide to buy a home in a friendly neighborhood because you liked it. However, if the circumstances change such as natural disaster, change of career, or other unforeseen issues, you might find it hard to move. As a tenant, you can move whenever you feel it.

Making the Investment

Even though buying a house is better than renting, owning a house can be a big investment for some of us. Buying a house is a complicated process but renting is easy. All you have to do is find your room in your selected area, call the owner for an inspection of the room and if you are happy with it, you can negotiate the rent before signing the agreement. In order to save effort and time, many owners just make a verbal agreement with their tenants. Since there’s already furniture in most of the rooms or houses for rent, you have just to bring your luggage.

This is not the case with buying a house. You will need a loan and the process can consume all your time! You’ll need to find the best loan with a better interest rate, and you will have to wait a probable approval of your application. You’ll also have to buy your furniture, and cover the costs of any big repairs.

Renting a house doesn’t require big capital. Generally, the landlord will ask two months of rent, and perhaps one month utility deposit before you sign. This is nothing compared to the capital you need before you can buy a house.

What About Renting With Bad Credit?

One of the unfortunate side effects of having a bad credit record, is the difficulties it can pose in trying to rent a property. Landlords understandably want to know that their rent will be paid, and so
a poor credit record or a CCJ can affect your ability to rent. However, it doesn’t have to be a disaster.

If you are having problems renting, the following advice can help you secure a home, without the benefit of perfect credit.

Check your Credit Record

If you have poor credit and are thinking of renting, check that there are no errors on your credit report first. This will give you time to get them changed.

Offer a Guarantor

This works in a similar way to guarantor loans. Providing a friend or family member as a guarantor against rent default will reassure a landlord or agency that the rent will be paid. The guarantor will have to be a homeowner, and over 18 or 21 to qualify.

Offer Rent in Advance

Again, a landlord or agent who is unwilling to take a risk on a bad credit tenant, will normally be happy to receive a number of month’s rent in advance as security against default. If you don’t have the cash, consider a short term loan to pay in advance.

Talk to the Agents or Landlord Personally

If all else fails, it is worth appealing directly to an agent or landlord, and explaining why you have had problems in the past. A genuine case of misfortune or hardship doesn’t necessarily have to count against you, and it’s always worth trying to explain.