How to Get an Apartment in New York Without Credit

Ruth Shin

CREDIT SCORE

Brooklyn, New York

It may be surprising, even for some native city dwellers, that you will need credit to apply for most apartments in New York City. Virtually, every apartment you apply for will require your credit report to be pulled, even if you let the real estate agency or management company know ahead of time that you have no credit. So be prepared to dish out the fee, which can cost you anywhere from $25-$150. You’ll often see this labeled as an application fee. 

If you don’t have credit, you’re probably either a foreign national, a recent graduate, or someone who never owned a credit card because you didn’t want to deal with the “hassle” or go into debt. The lattermost reason seems logical, but the best way to not go into debt is just to ascertain that all your bills are paid on time and not to completely avoid having credit.

Guarantors

Your best option in this case is to get a guarantor. Your guarantor is usually going to be a parent, a relative, a close friend or colleague who trusts you. The usual formula a landlord will follow for a guarantor is that they will need to make at least 80 times the monthly rent, and have excellent credit. Should you default on your rent, this person will be required to step in and settle your debt, so they need to show that (assuming their rent is identical to yours) they can cover their rent and yours and that they always pay their bills on time. 

The default will appear on your guarantor’s credit, so make sure you pay your rent on time. People with great credit are often dismayed with blemishes on their record and they won’t think kindly of this incident. Think about it this way, they’ve worked hard to build a reputation for themselves and now someone else is letting their financial troubles mar their credentials.

What Can Foreigners Do?

If you’re a foreigner you’ll need to find a domestic guarantor as no one will be open to a foreign-based guarantor. This is because proving their credit-worthiness would be very difficult. In this case, you might find it necessary to apply for a third-party guarantor such as Insurent or The Guarantors. These are also accessible to Americans without credit or with less than stellar credit. These companies act as the guarantees for the rent. Just make sure that the landlord is willing to participate in these programs.

Paying Extra Money Upfront

In the case that you cannot get a guarantor, you will most likely then be asked to pay rent money upfront. You will still need to pay the security deposit, so factor that into your calculations. A highly probable scenario will be that you are asked to pay six months up to a full year of rent upfront. Occasionally, you may be able to negotiate with a motivated landlord to accept just one to two extra securities.

Alternatives to Traditional Housing

If paying extra money or finding a guarantor are not an option, you might want to find out if any relative or friends have extra room in their apartments or houses, or if someone you know already has secured an apartment and is looking for a roommate. In the same vein, there are people letting rooms in their own apartments. Make sure you are looking at rooms being advertised directly from the owner of the apartment (as opposed to a broker or a landlord of a building). However, going in with a group that’s looking to share a new apartment probably won’t be an option for someone with no credit, as all the roommates must be put on the lease.

You can also look for sublets which are aplenty in New York. A sublet is an apartment or property that is being leased by another individual that you can rent in their stead. However, you will be paying the rent to the person on the lease, and not directly to the landlord unless they have made arrangements with the landlord. With no credit, you will not be able to take over the lease officially, so this is a good option. It may be just enough months for you to start building your credit, so more good news!

Checking listings for apartments for rent by owner in a smaller 2-3 family home may also be a choice. Mom and pop-style landlords who dwell on the actual premises are more likely to be understanding of your personal situation.

Do I Really Need Credit?

FICO Credit Score

In a city that runs on money, even landlords need to know that they are making sound financial choices with tenants. In turn, these tenants need to show that they are making sound financial decisions and know how to handle their finances. This is because when an owner lets his or her property to you, they are in a sense becoming a lender to you. At lease signing, you are actually agreeing to pay the landlord the full year’s worth of rent, but in monthly installments.

Not having credit may bar you from doing so many things in life or delay many opportunities for you such as getting a phone, buying or leasing a car, buy or renting property, or taking out a loan. You might say you’ll avoid this avenue by simply paying for things in cash, but remember that you’ll need a lot of cash that most people don’t ever have lying around to buy a car or a house. Also, if you have children applying for college, it may prevent you from helping out them with student loans.

Does My Rental History Count?

The most recent rendition of the FICO score (9), now includes rental payment history. Whether this shows up in your report will also depend on if your previous landlord(s) reported it to a credit bureau. It may also help to get a rental payment history and letter of recommendation from your current or previous landlords and submit that with your paperwork. 

How Do I Get Credit?

If you didn’t get a credit card with your parent’s help during college, it’s not impossible to start building credit now. The easiest way to start is to apply for a secured credit card, which is like a having a bicycle with training wheels. This is a credit card where you’ll need to put money upfront (whereas traditional credit cards are offered free or with a membership fee charged to the account). Once you open up the account, make sure you spend a little each month but pay your bill on time. After several months of good payment behavior, the credit company will offer you a traditional credit card. You can also apply on your own for a different credit card. However, be sure you do not apply for more than one at a time or a few in one calendar year. Too many inquiries into your credit will affect it negatively.

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