Can a landlord reject me for too many lines of credit, even if I've got plenty of cash and no debt?
Even though I have a high credit score and make 40 times the rent, I was just rejected for an apartment because the amount of credit on the report was too high. I even offered to pay a year's rent up front, and was refused. I'm shocked—is this standard procedure, or a new trend with city landlords?
While this particular policy isn't necessarily standard with city landlords, it's certainly possible that there are some building owners who see your level of credit as a dealbreaker, say our experts.
"It so often depends on the landlord in question," says Corcorn broker Deanna Kory, who points out that past experience with a bad tenant could have made them particularly cautious.
"If a landlord has had an issue with someone who had the same financial profile and then paid up front and somehow was not a good tenant, often that landlord is subsequently soured to [future renters] with a similar financial profile," she explains.
"Your open lines of credit may be working to your disadvantage," says Sotheby's International Realty broker Gordon Roberts. How? "The building probably added the the value of the proposed lease to that number, counting the sum total as 'debt,' thereby resulting in an unacceptably high debt-to-income (DTI) ratio number," he explains, adding that "landlords can set the 'qualification bar' high if the demand is there, and it can vary from building to building."
If you've got your heart set on this particular apartment, you've got options. Roberts suggests meeting with a credit counselor to look at your finances and see if there are any red flags you haven't noticed. If so, you could potentially clean up your financial picture and re-apply to the building.
Kory also suggests offering extra security on top of the year of upfront rent, and perhaps even "writing a personal letter that is very considerate, including information about your work history your tenant history and why the debt is as high as it is," she says. However, she cautions, "since every landlord is different, it will work with some and not with others."
That said, you can also simply take your search elsewhere, and will very likely find a landlord who isn't troubled by your credit situation. "This is not common, in my experience," says Bohemia Realty co-founder Sarah Saltzberg, of your unexpected rejection based on credit alone. "I've never had this happen."
Usually, says Saltzberg, landlords are much more focused on your credit score, and why it is what it is. "For example, if the score is 630 but there is medical collection or student loan outstanding payment, most landlords consider that very differently than unpaid credit card bills," she explains. "Also, income and history of income is very important, as is money in the bank."
In other words, given your high credit score, solid income, and lack of debt, there are many landlords who'll likely have no problem taking you on, particularly if you once again offer to pay a year's rent all at once. "There should be landlords that will accept a year of payment up front, because it lowers their risk dramatically," says Kory.
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