Many landlords and property managers have specific credit requirements before renting a space to a tenant. The credit score is often used to determine if a tenant is a good candidate for the space. Some real estate experts agree that a score of 680 or higher is acceptable in most cases depending if tenant concessions are involved. What if your credit score is less than acceptable? It does not mean that a deal can’t be made. It is important to work with a commercial broker who has experience in the negotiation process to ensure the tenant has the best chance of sealing the deal. Below are seven strategies that may be helpful to overcome poor credit:
- COMMUNICATION: Explain your financial situation to the landlord – It is better to lay everything out in the beginning because at some point during negotiations it will come out. Be willing to work with the Landlord.
- MORE SECURITY: Offer a double security deposit or prepay future rent.
- CO-SIGNOR: Get a co-signor with strong credit to offer a personal guarantee –
- TAKE SUITE AS IS: Take the suite with no tenant improvements or any additional concessions.
- LETTER OF CREDIT: Get a letter of credit from your bank.
- PROVIDE REFERENCES: Request a payment history from a utility company to show that you have been making timely payments.
- REPAIR CREDIT: Be proactive in trying to improve your credit score by paying credit cards and bills on time. There are companies that can help clean up your credit report.
If tenants are willing to work with the Landlord and show they will be responsible tenants, there is a greater chance of overcoming credit challenges while cementing a successful lease.