The search for your first apartment to rent in NYC can be a long one, and even if you do find that dream apartment, you’ll still need to prove that you can pay for it. For a lot of young people, especially students burdened with debt, meeting the strict criteria from landlords in NYC is not an easy affair. Most landlords want to see a high credit score or a salary that equals 40-45 times the monthly payment. Something which is beyond the means of many New Yorker’s, both newbies and natives alike. A co-signer usually steps in during these situations, but that presents another set of difficulties and won’t be a viable option for everyone.
What is a Co-signer?
A co-signer, or guarantor, is someone who co-signs your lease and agrees to pay the rent if you can’t. The typical requirements for a co-signer is a credit score of at least 700 or, if you don’t have that, an annual income of 90 times the monthly rent and, more often than not, residence in the tri-state area.
Most people first look to family to serve as guarantors, but if they don’t meet the criteria, this can be a serious roadblock. Fortunately, there are some ways around this.
Alternative 1: Offer extra cash up front
With some landlords, you can get around the requirements by offering more money upfront. Depending on how much security the landlord requires you may want to put up a year’s worth of rent. Other landlords may prefer a hefty security deposit rather than paying many months in advance. When it’s time to renew, and you’ve been a responsible tenant you may be able to negotiate a “burndown” on the deposit where you would get a month or two back.
Alternative 2: Hire a guarantor
This is a standard route for foreign buyers with no U.S credit history. A company like Insurent can do this for you.
More often than not the guarantor needs to be in-state which is what makes this option so useful. For U.S citizens with credit history, the rates are usually 75-80% of a month’s rent. For foreign renters with no credit history, it can be 100-110%. For students with debt, you may pay more than 85%. However, if you have a steady job with a large company, you may pay less.
Alternative 3: Sublet or become a roomie
If you can’t meet the requirements or offer any extra cash upfront, you can always opt for a sublet. No one likes to stay in a place where their name is not on the lease but considering you can avoid the financial requirements this way it may be your only option. It’s very easy to find sublets these days through sites like Lease break and Flip. You can also find a roomie through sites such as Symbi and Diggz.
Alternative 4: Build your credit
Even with these workarounds, it’s good to take time to improve your credit score so you can avoid this problem in the future. With better credit comes better interest rates and more secure financing the next time you need a loan.
Start by getting a secured credit card or installment plan. With a secured credit card, you will typically make a cash deposit to the credit card issuer to serve as collateral. Your credit limit is either equal to or a percentage of your deposit. Keep your credit card balance as low as possible, say, 30% or less. Don’t close old accounts that are no longer in use as your credit history is essential in determining your credit score. When possible, pay more than the minimum monthly payment on the rent. Paying just the minimum amount each month can be a red flag to lenders and damage your credit score.