4. Establish or Rebuild Your Credit History

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4. Establish or Rebuild Your Credit History

One company that offers this service is Insurent. It charges a one-time, nonrefundable flat fee based on a percentage of your rent after your apartment application is approved.

Note that if you can’t find a landlord willing to accept a co-signer service’s guarantee, then you might be able to secure an apartment by paying a larger security deposit or prepaying the rent.

3. Try a Peer-to-Peer Lender

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If you want to borrow money and conventional lenders have rejected you, then peer-to-peer lending might be an option. The two most prominent companies in this area are Prosper and Lending Club. Both companies will check your credit score when you apply, but they do not require borrowers to have perfect credit, and you can use the borrowed money for a variety of purposes. The worse your credit score, the higher your interest rate Harrisburg bad credit payday lenders will be, and you might not get approved. However, it could be worth applying to find out.

Prosper has a recommended minimum credit score of 640. Lending Club does not list a minimum credit score requirement on its website, but other sources have reported that the minimum is 660.

Important

If you can’t get a loan or an apartment without a co-signer, then this might be a signal that it’s not a good time to borrow money or commit yourself to paying a lease.

Lenders require co-signers when a borrower has no credit or damaged credit. In either situation, you can create or re-establish a favorable credit profile by applying for a secured credit card that will report your activity to Equifax, Experian, and TransUnion, the three major credit bureaus. All you need to do is make one small purchase a month on the card and pay it off before the payment due date.

If your problem is that you have no credit, then within about six months of beginning to use your secured credit card, borrowing only a little, and paying it promptly, you’ll meet two of the most important criteria for having a strong credit score: a low credit utilization ratio, and a history of paying on time. At this point, you might qualify for a loan or an apartment without a co-signer, assuming you earn enough income.

If you’re repairing damaged credit, then you may have to wait longer, because negative items remain in your file for years. Lenders need to be convinced by your credit score that your new, positive repayment history isn’t just a short-term change.

Should You Wait to Borrow Instead?

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If you can’t get a loan or an apartment without a co-signer, then this might be a signal that it’s not a good time to borrow money or obligate yourself to pay a lease. Lenders and landlords want someone else to guarantee payment because they aren’t sure that you’re good for the money. It’s possible that their concerns are justified.

Having your loan or apartment application rejected can be a blessing in disguise when you can’t really afford it. Instead of adding more stress to your situation by taking on another financial obligation-and dragging someone else into your problems by asking them to co-sign, potentially damaging an important relationship-look for alternatives that you can afford on your own. They might be less than ideal, but when your situation improves, you can reapply for another loan or apartment.

The Bottom Line

It’s frustrating for sure to not be able to live where you want or buy something that you think you need, and most of us have been in this situation at some point. But lenders and landlords make their decisions based on objective financial considerations, and you shouldn’t take their rejection personally.