Your roommate’s bad financial behavior can ding your credit and hurt your finances.
Living with roommates often makes sense, both socially and financially. Especially in expensive rental markets like San Francisco, CA, and Seattle, WA, a roommate can lower your living expenses, free up your cash, and serve as a built-in friend to explore the neighborhood with. But let’s face it: Sharing your space with someone can be challenging. And as close as you two are, if your roomie is causing financial headaches, the risks can completely outweigh the benefits of splitting the rent.
Eating your food out of the fridge is one thing. (It’s annoying, yes, but in most cases, not life-altering.) But having your roommates impact your bigger financial picture, including your credit, is another. For starters, if you’re both on the lease and bills, you’re equally responsible for ensuring they’re paid each month — and you’ll share equally in the damaged credit should those bills go unpaid. Any bills with your name on them are your responsibility.
To avoid entering a situation with a bad roommate, consider these five ways to prevent or put an end to the madness.
1. Screen potential roommates carefully
On the hunt for a new roommate? Choose carefully. Preventing issues with housemates is much easier than trying to deal with or fix them after they surface. First, establish a list of what’s not acceptable to you: You may not want a roommate who has pets, who works from home, or who smokes. Then search for people who are on the same page as you in other ways. Once you find people you think might be a good fit, consider their personalities and yours. Is there something obvious that may cause an issue over time?
Don’t forget to collect references, ask for employer contacts, and follow up on this information! Verify your potential roommate is who they say they are, and that they have people who can speak to their good character. If you have any concerns, address them right away. You can ask about their personal preferences and their financial situations (this isn’t impolite, and a good roommate should be concerned about the same with you). Finally, do a background check. This may sound ultraserious or formal, but if you’ll be inviting a stranger to live with you, it’s an important step to properly protect yourself.
2. Set the ground rules — fast
If you move in with a new roommate, make sure you set the rules regarding finances and shared expenses immediately. Be clear on who’s responsible for what, what costs you’ll split, and how you’ll pay bills. It’s smart to go beyond financial issues such as rent and bills and establish a variety of ground rules such as overnight guests and noise limits. Reach an agreement on what’s OK and what’s not and then put it in writing.
3. Problems? Try communication first
If your roomie’s unpaid rent or bills are threatening your credit score, try talking it over as a first step. Have a conversation, remind them of your agreement, and explain the consequences of not paying rent or bills. In most cases, it impacts both their credit and yours, and you could face eviction if rent goes unpaid.
4. Consider your options
If the problems continue, it might be worth asking your roommate to leave or finding another living arrangement for yourself. And if the situation reaches a point where you can’t do anything else to change it, you can look into local eviction rules to see if they apply. Depending on the severity of your experience, you may also consider suing your roommate via small claims court.
5. Move on
At the end of the day, if your finances — or your quality of life in general — are being seriously impacted, you may need to move on. This is yet another reason maintaining an emergency fund is so critical. If you have savings set aside for the unexpected, you may be able to handle the financial ramifications of breaking a lease or paying the rent on your own for a while. An emergency fund can also help you sort through bills and expenses left unpaid by a deadbeat roommate if necessary.
While ponying up to cover someone else’s mistakes is not ideal, being able to pay those costs is one less thing to stress about in the situation. It’s much better to handle the shared expense in cash instead of putting something on your credit card and carrying a balance. Afterward, you can find a new roommate who won’t drag your finances down.