By Niko Vercelletto
Having roommates is a great way to save on rent, at least in theory. But you’re also trusting them to shoulder their share of the financial burden. So what if, one day, your roommate can’t pay the rent? One weak link could also drag you down—ruining your credit, draining your finances, and worse.
So even if you know and trust your roommates, your financial future is too important to leave up to that. Here’s how to ward off roommate money mishaps at every stage—from the moment you decide “Hey, let’s live together!” to the moment your roomie tells you he can’t ante up.
Ask to check their credit report
While potential roommates may insist they “always, always pay the bills on time,” that’s not worth much more than a lot of hot air. The only way to get a real grip on their reliability is to check their credit report—which reveals any history of late payments (or no payments) in excruciating detail. This is why landlords always check the report of anyone they consider renting to. However, here’s the rub: Landlords may be all too willing to rent an apartment to a group of tenants as long as one of them has great credit. Of course, that’s the one who’ll have to pick up the slack if the others don’t come through—or else his credit will go straight down the tubes, too.
So take a tip from your landlord and ask to see your prospective roommates’ credit reports, available on sites like MyFico.com for less than $30. Some credit cards, like the Discover it card, provide free credit scores if you’re a member. Your roommates don’t need perfect numbers (at least 660 will do). You just need to know that the person you’re getting entangled with won’t drag down your finances.
Put it in writing
This may seem like overkill, but delegating who is going to pay what—and having it written into your rental contract—can help protect you from being responsible if someone flakes. Decide early on which person will pay for which expenses—or what portion—for everything from rent to internet to electricity. Then consider asking your landlord to add language to your rental contract reflecting those commitments.
Jocelyn Baird, a credit expert with NextAdvisor.com, says, “It is definitely possible to request this in writing, especially if you’ll be living with people you don’t know.”
Pay your landlord directly if possible
It’s scary that it’s considered normal to hand a huge chunk of money to someone who presumably then hands it over to the landlord. This middleman approach works until it doesn’t—and when it doesn’t, it really doesn’t. Just ask Pat Coffey, 22, of San Francisco.
“I paid almost $600 a month worth of rent to my roommate in the assumption that he would give it to the landlord. Little did I know that he had taken out a loan from a loan shark he hadn’t paid back. You can probably see where this is going. He had been taking my money and paying the insanely high loan every month and hiding the eviction notices. The landlord eventually sued us for a few thousand dollars that needed to be paid, and my credit was subsequently trashed.”
The only surefire way to avoid this awful outcome is “to make your payments individually by check to the landlord,” says Baird. For added measure, “request receipt for the monthly bill to be sure that your money is getting where it needs to go.”
Never, ever pay your roommate’s rent
Loaning your roommate money for rent is a terrible idea. Dawn Rossetti, 23, of Long Beach, NY, learned this the hard way: “I gave my roommate the rent for the month because she was short on cash after losing her job. I figured she would pay me back, but after two months of receiving nothing and seeing that she started buying herself tons of frivolous things, I knew something was up. It took me cornering her in the hallway to get the cash back.”
Speak up at the first sign of trouble
If your roommate is missing rent or not keeping up with the utilities, talk to him—and your landlord—to figure out the next step. Playing it safe and waiting until it fixes itself is the worst possible choice, because it rarely does.
Samantha Fischer, 20, of Chicago took a drastic strategy to get her roommate to finally pay the bills.
“After two months of paying his share of the rent, not wanting my credit to fall, I finally had enough. While he was away I changed the Wi-Fi password. He came up to me furious, but I stood my ground and told him that once he paid the rent he would get the Wi-Fi. It was like dealing with a child, but it worked, and I did this every month with no problems.”
If you want to protect yourself even further, you can read “your lease agreement thoroughly and [consult] your local city/state tenant laws,” says Baird. “Each state has different laws for renters and landlords.” And hey, it never hurts to have the law on your side.