Let’s assume you find the ideal apartment and you are getting excited to move in. You fill out the rental application, submit it to the landlord or property management company and your application is denied. What are your options and next steps? Your options are to continue the conversation with the potential new landlord or property management company to see if there is an opportunity for them to reconsider your application or move on to the next apartment. At a minimum you should ask the reasons for the denial so that you fully understand and comprehend them. In the event that you are going to continue your search for a new home you will need to address any potential negative items on your application for the next landlord so that you don’t make the same mistake twice or so that you can address them on the front end to ensure the best opportunity for your application to be approved the next time around.
There are many reasons why a rental application might be denied. Landlords and property management companies usually have qualifications that a potential tenant must meet in order to be approved. It would be important for a potential applicant to ask what these criteria are in advance so that you fully understand whether there may be some issues before submitting the application. Below are some reasons why your application might be denied and suggestions as to how to deal with it:
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Your Income was Inadequate or Incorrect
Many landlords have a requirement of 2 to 3 times the monthly income versus the rental amount. What this means is that a potential tenant must earn 2 to 3 times the monthly rent to be approved. If your income is less than this amount you could be denied. It would be important to understand the landlord’s criteria before wasting everyone’s time. The landlord does this to ensure that you have the ample funds coming in to afford the rent and candidly you do not want to put yourself in a position to be overextended beyond your means.
In the event that you are applying with a roommate the landlord will combine both incomes which certainly will assist in qualifying for the income requirement. In the event that your income does not qualify you may look to get a co-signer which will help ensure that the financial obligations of the lease are met.
In the event that you listed your income incorrectly on the rental application and your paystubs or rent or income verification do not match the landlord may decline your application. In the event that you are self employed you will need to provide some sort of back up for your income. It is not feasible to assume that the landlord will accept whatever amount you fill in on the application to be true or correct. The landlord may require pay stubs, tax returns, or bank statements as additional information. In the event that your bank account has limited funds and you have no official pay stub or paycheck the landlord may choose to decline you on that basis.
In the event that your income is generated from multiple sources either multiple jobs, a second part-time job, family members, a trust account, stocks or other investments or social security, disability or other governed mental subsidies, you should certainly add that on your application and explain it to the landlord.
We also strongly recommend a cover letter with your application explaining your circumstances and providing additional detail with regards to your employment, income, your family, and history. This makes you a more sophisticated rental applicant and gives the landlord a much better perspective as to who they are dealing with other than just a name and phone number and other basic information on the application. In many instances we have recommended to applicants to include a picture of themselves, their family or certainly if they have a pet that they would like the landlord to approve to include a picture of the pet as well. This makes the application much more personal and provides the landlord additional necessary information which hopefully will aid them in making a positive decision towards approving your application.
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Credit History and Credit Score
All landlords who run a credit report on potential applicants look not only at the credit or FICO score that is generated from running the report but they also look at your credit history and the individual accounts on the report. While the score is important it is also more important to have good credit on your credit report as opposed to bad credit or no credit. Many individuals who do not have credit cards or have not applied for credit will have either no score or their score will be greatly impacted by the few limited accounts that they have. Landlords like to see that you have obtained credit from other sources and have been responsible in paying those debts. Additionally, if you have credit cards with available credit on them this would serve as a safe guard in the event that there was any unforeseen circumstances or financial difficulty then you could utilize the credit cards as a second source to pay the rent. For those individuals who have negative marks on their credit for not paying utilities, other landlords, cell phone bills, or other credit cards this will have a huge negative impact on the landlord’s view of your financial responsibility. Simply stated, someone who is not responsible in paying other bills for a smaller amount than the rent may be a high risk to the landlord. If you have collection accounts for utility companies, you may have a problem putting the utilities into your name which may also be another complication. For those individuals with large amounts of debt from student loans or car loans as long as you are making your payments on a monthly basis the landlord should have little concern with regards to that debt on your credit report. Landlords are concerned with your ability to make your monthly payments and the history of how you make those payments. Therefore, it is imperative to ensure that you do make your payments in a timely fashion. In the event that you determine that you do have negative marks on your credit report it is important to address those on the front end.
We suggest to all our applicants that they go on creditkarma.com or myfreecreditreport.com. These are free websites where you can run your credit, obtain a score, and look at all the items contained in your personal credit report. This will give you an indication as to whether you have good, average, or below average credit before applying for an apartment. You can then either attempt to fix those items if they are incorrect, pay off some of the smaller debts to improve your credit score or explain them to the landlord if there are extenuating circumstances.
In many instances if you have a low credit score or bad credit you will either be required to have a co-signer, increased security deposit or the landlord may just flat out decline you on that basis. In the event that there are multiple individuals applying for the property the landlord will look at all of the individuals so that if one roommate has bad credit and the others all have very good credit your application may still be approved. However, please know that if there are multiple applicants and all of them have bad credit it is going to be a serious problem. It is likely that if you are declined from one or two places you will continue to see this type of response unless you figure out a solution to address it. You will either need to clean up your credit, post an additional security deposit or obtain a co-signer. These are all conversations that are helpful at the beginning of the process rather than trying to deal with them after the fact.
Many applicants simply choose not to bring their credit to the landlord and hope that they either will not run their credit or will not say anything. This is a common mistake and not advised as the landlord will run your credit and may just decline you without any follow-up.
Address any background negative information on the front end.In the event that you have a bankruptcy in the past or you have been divorced and your spouse had bad credit which then transferred over to you or your spouse intentionally wrecked your credit these will all show up on the credit report. If you know this in advance, once again it is best to write a letter explaining this to the new landlord rather than trying to dig out of a hole after the fact. Some landlords run a criminal background check so if you have had any criminal instances in the past it is best to explain them on the front end as well.
The other important factor to note is that the more recent that these things have occurred the higher risk you are to the landlord. One negative financial item that occurred 5 or 6 or 7 years ago is not as bad as multiple instances that occurred in the last few months. It is important to understand these factors so you can address them accordingly.
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Co-Signer or Increased Deposit
In the event that you believe that your application may not be approved it is best to get a cosigner or be prepared to put up an additional security deposit to secure the property. A co-signer could be a parent, sibling, or other family member. These are the most logical co-signers as they are related to you and have an invested interest in your success. While a co-signer could be a third party such as an employer, friend, or acquaintance this is not as strong of a co-signer as a family member. The landlord will typically look at the co-signer’s credit and the co-signer’s income as well to ultimately make their decision. If your co-signer also has bad credit or does not have substantial income this will not help your cause.
The other way to help secure a property is to offer up an increased security deposit or pre-pay rent. In both instances this is money you will ultimately get back at the end of the day. Pre-paid rent will be credited against your account for future months’ expenses, so you are not actually out the money at the end of the day. An increased security deposit will be refunded to you at the expiration of the lease.
In some instances, you may be able to negotiate to reduce the security deposit later once you prove your financial responsibility to the landlord. Some landlords may be open to reducing the deposit if you pay your rent on time for the first 6 or 12 months of the lease term. These are both good options in addressing credit concerns for the landlord.
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Make Sure You Have Good References
In many instances landlords will check your references on your application. This would include your previous landlord or landlords, as well as parents, employers, friends, and family members. Obviously, parents and family members will have biased opinions so landlords do not take as much credit for those references as they would from your previous landlord. It would be a smart move for applicants to get a letter from their previous landlord stating how long they lived there and their experience with you as a tenant. A good landlord reference letter will go a long way in giving a new landlord security and comfort to rent to you. In the event that you list your previous landlord and he does not return the new landlord’s phone call and does not respond it does not send a good message. It is best to let your previous landlord know that someone may be calling them so that they can respond accordingly and help your cause. In some instances, larger companies require that a landlord reference be completed in writing. You should know that if you paid your rent late on several occasions with your previous landlord this will show up in the landlord reference that they provide to your new landlord. Any references that you can provide that would be credible and positive along with written back-up would be great additions to your application packet.
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Pets and Smoking
In many instances applications are denied by landlords in the event that they have a no pet, or no smoking policy and you have a pet or are a smoker. These are simple denials for the landlord, and you must be aware of them as an applicant. In the event that a landlord does allow for pets you may be required to post a pet deposit, pay pet rent, provide vaccination information, and/or another additional back-up. In the event that you are a smoker, a landlord may require you not to smoke in the unit itself, in the garage, or in the common areas of the property. While the landlord may not have an issue with you smoking other residents may, which can cause problems especially at multi-tenant properties.
It is important to note that while smoking marijuana in California is legal that does not make it acceptable for tenants to smoke at the property. If a landlord has a no smoking policy this would apply to all forms of smoke including vaping, cigars, cigarettes, and marijuana. Even if you have medical marijuana card which requires you to use these substances for medicinal purposes it may be problematic for your landlord and may be cause for them denying you. Based on the risk to others at the property if you do not disclose these things to the landlord upon your move-in it may be grounds for terminating your lease later on. It is best to be upfront about it and make sure that the landlord is okay with these issues before signing the lease.
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Incomplete Information
When completing the application, it is imperative that you complete all of the information on the application to the best of your abilities. If you do not have the information or it does not apply, then please write that on the application. Just simply leaving portions of the application blank may cause your application to be denied or returned to you as incomplete. This not only will delay the process but may cause you to lose the apartment or property to another applicant who has completed their application quickly and correctly.
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The Property has Already Been Rented
In a tight real estate market there may be several applicants vying for the same property. Therefore, it is important to submit all of your information together at one time and as complete as possible. If you provide partial information or information on one roommate and not the other this will cause delays in processing your application and another applicant who submits their completed application properly may be approved. If the property is simply no longer available, the landlord may deny your application on that basis.
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Can I Appeal the Denial of My Application?
The landlord at their sole determination, assuming they have solid reasoning can deny your application and does not have to accept any appeal from you. There is no formal appeal process however, if you feel though as your application was denied incorrectly you can certainly follow back up with the leasing agent, property manager, or landlord and ask to provide additional clarification or information which may help change their mind in approving your application. It is not recommended to complain or criticize the landlord’s decision. Simply state your case and ask them to reconsider. In the event that your application is ultimately denied it is best to understand why it was denied so that you can address it for the next property. At that point, the best option is to move on and make sure that your application packet the next time around addresses whatever issues existed.
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What if My Application is Denied because of My Roommate?
When applying with roommates, family members, boyfriend, girlfriend, or spouse you are considered “joint and several” tenants. This means that you are considered one tenant so if one applicant is denied then unfortunately the entire application would be denied. The landlord will look at the overall income and credit on a combined basis but if one of the individuals has significant negative marks for whatever reason this may cause your application to be denied. Your only remedy to this would be to look for a new roommate or attempt to address the items of concern.
Our best recommendation is to make sure that your application is complete and that you provide as much detail as possible on the front end. This will help ensure that the process goes quickly, and you get the desired result you are seeking.