Bad Credit and Rental Applications

Since my Giants stunk up the joint yesterday, the only think left to do was accompany friends to Molly Spillane’s in Mamaroneck to watch the Jets beat the Bengals. Another guy we were with apologized to bring up work but had a real estate question (I actually don’t mind. I bring the stuff up myself). He was relocating to Manhattan, and had found an apartment he liked, but was afraid that his rental application would be denied due to his low credit score. He had a guarantor, but their credit was good, not great, and he asked me if there was anything he could do to strengthen his case with this apartment or make a stronger case if he had to apply elsewhere.  

I’m no expert in Manhattan rentals, but I am a landlord. I think most landlords agree with me when I say that a vacant unit is not good, but is better than a bad tenant. I asked him what his rental application included, and it was the application form, bank statements, and either his credit report or an authorization to run it. His agent suggested that he offer to pay extra rent in advance, but he wasn’t sure if that was a good idea. Lots of questions. 

Here is what I told him:

• Cash is king. Extra rent in advance would be a good thing, because it showed that he had money and he offered good faith. If you could pay 3 months rent in advance, it might be a huge compensating factor. I would not, however, put more than 2 months rent as a security deposit. 
• When I was active in mortgages a letter of explanation was often required with files where credit was dinged. A good letter of explanation can show the landlord that you aren’t an irresponsible deadbeat, but a good person who had some bad circumstances. If anything, just being conscious enough to acknowledge the lower score and be smart enough to try and explain it might do the trick. 
• The application did not ask for his current landlord as a reference. This perplexed him. I explained that current landlords are not always good references. I’ve seen spiteful landlords lie about good tenants because they were angry that they did not renew their lease; I have seen landlords eager to get rid of crummy tenants give them glowing reviews. 12 months of cancelled checks are a far better thing to include. Cancelled checks are hard to argue with. 
• If his application is denied before he can submit these things, the world wouldn’t end if he re-applied with that documentation included, with a humble request for them to reconsider.