A foreclosure on your credit report can make renting an apartment nearly impossible

Posted by Caitlin on July 3rd, 2008

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As foreclosures rise, former homeowners with blemished mortgage histories are flooding the rental market. Unfortunately, landlords are often hesitant to rent to applicants whose credit reports show a history foreclosures, short sales (when a house is sold for less than the amount owed on the mortgage) or deed-in-lieu of foreclosure (when a homeowner gives up a house to the lender to end the foreclosure process). Rental applicants with other credit problems such as overextension on existing credit lines or public records related to collections are often rejected by landlords as well. Some landlords will conditionally accept applicants with questionable financial stability, asking for an extra month’s rent up front, a larger security deposit or a co-signer.

Trish Lynch, a trainer and former credit counselor at ClearPoint Financial Solutions, suggests that homeowners who are facing foreclosure start looking for a rental before the foreclosure process is completed, since lenders can’t report foreclosures to credit reporting bureaus until the procedure is finished. “You want to look for the rental before the foreclosure hits your credit report,” she said. “Because after that, it becomes much harder to find a rental.”

If you are concerned about your credit history, a credit monitoring service can keep you informed about any changes to your credit, and even help you determine the best strategy for improving your credit score.

• Reader Question: Which credit score do lenders use?
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• Equifax offers free 3-in-1 credit report and 3 bureau credit report monitoring
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• Keep your credit purring like the engine of your car