A New Job Won't Neutralize Bad Credit

Q: Dear Debt Adviser,
For the past three years, I have been living with friends and with my married brother in San Diego due to the mortgage industry downsizing, layoffs and recession. As a result, my credit report has taken a beating. Now I am back to work with two jobs, and I am looking to move into a rental house. I am paying off my debt, but there are paid collections and unpaid collections on my credit reports. What can I do to increase my chances of the property management companies accepting my background check and of securing a house to rent? Please advise.
-- Jacqui

A: Dear Jacqui,
Sometimes optimism can work against you. In your case, it sounds as though you didn't cut your expenses fast enough to keep from accumulating some serious debt while you were unemployed. It's easy to tell yourself that debt incurred while looking for a job is an investment in your future, and it is. But every investment has a downside, and this one's is that the investment failed to produce a job, or the job materialized later than you needed it to.

So, now that your ship has come in, it may sink your rental hopes. The solution to your dilemma is communication. You will need to communicate convincingly with the property management company, or landlord, and explain your situation. Tell the person you contact that you are working two jobs (pay stubs make you more convincing), are committed to resolving your financial issues and are willing to do your part to get into a rental.

You have several things working in your favor, not the least of which is the housing situation in San Diego. The San Diego Union Tribune reported recently that housing prices are still falling, albeit at a slower rate, in San Diego. Many people who own homes in San Diego that were purchased investments would likely love the opportunity to increase their cash flow with a renter. Likewise, persons who need to sell their homes may be willing to allow you a lease-to-own deal if that is something you want and can afford.