If you're having trouble securing an apartment for rent, don't overlook having a co-signer on the lease – an option that can strengthen your application and potentially grant you your dream apartment. Some landlords will notify you if you need a co-signer – also known as an apartment guarantor – but not all will, so it's important to keep this option in mind during your rental search.
What is a co-signer? A co-signer is a third party who is responsible if you are unable to pay rent. This person does not typically live in the apartment with you, but he or she is equally liable for your lease.
Do I need a co-signer? If you fall short of the lease requirements for any reason, a guarantor can help reduce the stress of applying. Using a co-signer does not mean you are a bad tenant – it simply acts as insurance for your potential landlord if you do not meet the income level, credit score or other requirements.
Landlords tend to develop their own renter selection criteria based on experience and characteristics of the local market. Some landlords place heavy importance on an applicant's credit score, as they feel it's a good indicator of a responsible tenant. However, many landlords review an applicant's credit report in full to try and understand the reasoning behind a lower-than-average credit score.
Nonetheless, a number of landlords are willing to rent to people with a poor or limited credit history. In fact, in an October 2012 survey of more than 1,000 property managers, Rent.com found an applicant's credit score ranked as the least important of five factors in choosing a tenant – falling behind gross-income-to-rent ratio, credit profile and payment history, rental history verification and a solid employment record.
A black mark on your credit report from missed payments to utility companies is another red flag for many landlords. If you can't pay your utility bills, a lot of landlords assume you won't be able to pay the rent.
Who can serve as a co-signer? A co-signer is often a family member or friend with a strong credit history and a solid financial standing. In many cases, landlords prefer guarantors who earn a significant amount of money relative to the cost of the monthly rent. Landlords commonly require a guarantor to make at least 80 times the monthly rent rate, but this can vary based on location.
When you discuss a lease with a potential co-signer, it's important to explain that he or she will likely need to provide personal information to the landlord. This may might seem invasive, as some guarantors are asked for recent tax returns, a letter of employment, recent pay stubs and recent bank statements. Also make sure your co-signer is fully aware that if (for whatever reason) you are unable to make the rent payments, he or she will be held responsible. Consider using a friend or family member as a co-signer carefully since your future relationship with the person may be at stake; should you fall on hard times, and they are forced to pay your rent, things could get dicey.
What if I can't find a co-signer? If you don't have someone who is qualified and willing to co-sign your apartment lease, another option is to use a co-signer service – although these services can be expensive. In metropolitan areas with large rental markets, there may also be programs that act as stand-in guarantors for a one-year lease. In New York City, for example, the Insurent Lease Guaranty Program provides institutional guarantors to creditworthy college students, non-U.S. residents, retired individuals and other renters in need of assistance.
Niccole Schreck is the rental experience expert for Rent.com, the only free rental site that helps you find an affordable apartment, gives you tips on how to move and then says, "thank you" with a prepaid $100 Reward Card.