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Do I Need Good Credit for a Rent to Own (RTO) Home?

by | May 6, 2022 | Credit, Rent to Own

Rent to Own: What Credit is Needed?

Rent-to-own homes are a great option for people who are looking to get into their own home without a mortgage, but who don’t have the credit history or income to qualify for a traditional loan. 

Also, many renters who can afford monthly rental payments may not have enough money for a down payment. Rent-to-own programs have a lot of flexibility and people in these programs may be able to pay off their homes without penalty and gain equity and build their credit over time. 

In fact, you might qualify for a rent to own home right now so we always recommend that people check– it can change their lives. Click here to see if you qualify for a rent to own home today. 

What Does My Credit Score Need to Be for a Rent to Own (RTO) Home?

If you have poor or less than ideal credit, it can feel like the deck is stacked against you. But just because your credit may not be perfect right at this moment doesn’t mean you can’t qualify for a rent-to-own home. There’s still hope! Here’s how to qualify for a rent to own home with bad credit:

First, check your credit report. (Click here to do that now.) If there are errors on it, such as late payments or incorrect balances owed, contact the credit bureau and ask them to correct them. You can also dispute any late payments or other errors on your report by writing a letter explaining why they should be removed from your record (for example, if the mistake was due to identity theft).

Note that if you run your credit report and find that it’s not as good as you’d hoped, you can begin the credit repair process by clicking here.

Second, build up your income for a deposit. If you’re self-employed or work part-time jobs that don’t pay well, consider taking on extra work—even if it’s babysitting or dog walking while you’re still in school. The more money coming in each month, the better! 

Third, Provide rental history. Rent-to-owns usually only work if the borrower has rented their own place in the past and has always been able to pay their rent on time, even with a poor credit score. Some lenders may decide that they want evidence of you paying your rent on time, every time for at least six months before considering and accepting an application. This will show that you have the income and history of paying rent without fail and they are likely to depend on receiving monthly payments from you. 

Fourth, Consider a co-signer with good credit. This is one of your best options to get approved and buy even if you aren’t the ideal candidate for standard financing from a lending program.

Fifth, Another alternative to qualifying for a rent-to-own program is finding private money for closing costs. These will typically come from friends or family. However, that is not advisable since it’s harder to get back once the loan has been issued, and the repayment terms are often more difficult – financially and personally – to pay back than what would be expected from a traditional bank. 

When you’ve got less than perfect credit, a rent-to-own agreement can open up all kinds of possibilities that were previously out of reach. The trick is in how you approach it.  As long as you have made and are continuing to make a sincere effort to rebuild your credit, have good rental history, and have sufficient income to cover monthly rent payments, you can qualify for a rent-to-own home too!

Don’t keep guessing. Find out if you qualify for a rent to own home right now– click here and potentially change the course of your life forever.

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