When Renting, Should You Have an Apartment Cosigner?
If you’ve got good credit and can easily provide proof of income, you typically won’t have a problem finding a place to rent. People with less-than-stellar credit often find renting a bit trickier because most landlords require a credit check. Showing proof of income is a supplement to a credit check, but for those who donâ€™t receive a traditional paycheck (something that’s increasingly common in todayâ€™s gig economy), proving income can also be tricky. In these cases, it can be helpful to have an apartment cosigner.
How Does Cosigning Work?
Finding a place to live can be a complex process, from finding a good apartment to figuring out all the specifics of moving. The financial side of renting can complicate matters if you have poor credit. Thankfully, many landlords will allow someone to cosign on your behalf.
When you ask someone to cosign on a lease, itâ€™s similar to having someone cosign on a loan. This means that they wonâ€™t actually appear on the lease documents with you, but they are agreeing to assume financial responsibility, or, offer to pay if you miss a rent payment. Itâ€™s up to individual landlords whether to accept an apartment cosigner; they are not legally obligated to do so.
How to Know If You Need an Apartment Cosigner
Before you fill out a rental application, itâ€™s smart to have all of your Iâ€™s dotted and tâ€™s crossed. This means asking about everything youâ€™ll have to pay up front (and ensuring that youâ€™ve saved enough to pay the security deposit and other fees). It also means knowing ahead of time whether youâ€™ll need an apartment cosigner so youâ€™re not scrambling to find someone should you fail to pass the landlordâ€™s credit check.Â
To determine if youâ€™ll need someone to cosign, the first factor to check out is your credit score. These scores can range from 500 all the way up to 900, with anything above 700 considered good. If you have very little credit history or have factors that have driven your credit score down, the next place a landlord will look at is your income.Â
When landlords factor income into the equation, they prefer that your monthly rent not be more than one-third of your monthly income. You can show a W-2 form, a federal tax return, a pay stub, or even a bank statement. People who work in the gig economy and who donâ€™t have a steady income may find it challenging to prove their ability to pay, but showing the last 18 monthsâ€™ payment summaries can help.
How Do You Find a Cosigner?
Many people turn to family and close friends when they need an apartment cosigner, but sometimes this isnâ€™t an option. In these cases, a cosigner service can be of assistance. These companies are third parties that will act as a cosigner for a one-time, nonrefundable application fee. If you miss a rent payment and the company is forced to pay, however, youâ€™ll owe the rent to the cosigner service.Â Â
If you want to avoid using an apartment cosigner altogether, there are a few things you can do. The first thing is talking with the landlord to see if they would be comfortable with you paying a larger security deposit or pre-paying the rent for the first three months.
Some rental experts warn against prepaying rent and suggest an alternative: saving up enough cash for three to four monthsâ€™ rent and having the landlord hold it until you move out. This way, if youâ€™re ever late on your rent, the landlord has the assurance that they can draw from that pool of cash. Some landlords wonâ€™t agree to either of these offers, but they can be helpful bargaining chips.Â
Thereâ€™s no doubt that renting is better than buying; with these strategies in mind, even those with shaky credit can sign the lease enjoy the freedom offered by apartment life.