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10 things financial experts want you know about getting a roommate

A roommate can help you save money while you build credit. But things can get financially messy if you're not careful.
Image: Lesbian couple discussing financial bills over laptop while sitting at table
Making sure the rent and utilities get paid on time can be a major point of stress for leaseholders with roommates.Maskot / Getty Images

Many are familiar with popular television shows like “Friends” and “The Big Bang Theory” that portray roommate relationships as mostly happy, chummy affairs. And while roommates can be a great way for leaseholders to save money and build credit, in real life, these relationships can get messy. In worst case scenarios, they may even damage a leaseholder’s finances.

With rents in the U.S. becoming more and more expensive, especially in urban areas, where residents on average spend over 30 percent of their income on rent, according to a report from global real estate firm Cushman & Wakefield, many leaseholders may have little choice but to get a roommate.

Experts say having a roommate can be a positive experience if you take appropriate steps to protect yourself from potential pitfalls. Before you commit, set goals, have a plan, and be realistic, says financial debt resolution attorney Leslie H. Tayne, founder of Tayne Law Group, P.C. and author of “Life & Debt.”

First and foremost: Look at your roommate as a business relationship, she says.

“When you’re bringing someone in who is renting from you, that’s a business transaction, and it needs to be treated as such so that you’re protected and your tenant is protected,” Tayne tells NBC News BETTER.

Here’s how experts say you can make your roommate situation work for you.

1. First, talk to your landlord

Before you get a roommate, make sure your landlord allows it — some landlords will require your roommate to co-sign your lease, and not including them may cause you potential problems, says Rod Griffin, director of public education at Experian. If your roommate co-signs the lease, he says, this gives them equal rights to the apartment.

“If their name is going to be on the lease or the utility services along with yours, if they fail to pay those services, you will be held fully accountable,” Griffin says. “An indirect result of that could be that if those payments are not made on time, they could be reported to the credit bureau and they could affect your credit scores.”

In either case — whether your roommate is paying the landlord directly, or you as the leaseholder — if they don’t pay the rent, you may be left holding the bag.

2. Understand how the law may impact you

How leaseholders and roommates are protected under the law will depend on the city and state where they live and whether they are both on the lease, which is why it’s important to know the laws before you get a roommate, says Tayne.

A simple Google search for landlord + tenant rules + the county and state where you live can bring up a lot of useful information, she says. These details include the responsibilities of both tenants and landlords in your area.

3. Be very selective in choosing your roommate

Tayne recommends having several Skype interviews with your potential roommate before they come to your home, and to be sure to ask lots of questions.

“See their reliability,” she says. “Are they prompt, do they respond?”

Choose a roommate whose personality is similar to your own, she adds.

“You don’t want to bring somebody in who has a very, very different mindset when it comes to money contributions to household things,” Tayne says.

Before you begin scouring random internet listings for roommates, consider these alternatives:

  • Ask friends and family members if they know anyone who is looking for a roommate. 

  • Ask your university or human resources department if they have roommate listings. 

  • Search roommate groups on Facebook in the city where you live.

4. Request credit and background checks

Before you choose a roommate, be sure they can pay their share of costs and are safe to live with.

If your roommate is going to be on the lease with you, ask your landlord to do a credit and background check on them. If your roommate is not going to be on your lease, you will need to do the work yourself.

  • Request a credit report

  • Ask to see paycheck stubs from the last several months and a letter from their employer

  • Request 2-3 references from their previous landlords and roommates

Be sure to also run a criminal background and sex offender check on your potential roommate, stresses Tayne. If your roommate commits a crime on your property, like selling drugs, for example, you could be held legally responsible, she says.

There are many online services that provide background checks, which typically charge a fee. Make sure you understand your potential roommate’s privacy rights and any potential legal issues that can arise from background checks, adds Tayne.

Lastly, Tayne warns not to be overly trusting. She says anyone who is hesitant or refuses to provide information should raise a red flag.

5. Get a security deposit

There is always a chance that your roommate will run into financial hardship or leave without notice. To protect yourself in case that happens, request a security deposit before they move in. Tayne says the amount of the deposit should cover at least one month of rent and utilities.

In addition to a security deposit, Griffin says to start an emergency fund in case your roommate leaves or is unable to pay — this will ensure you will be able to continue making payments to rent and utilities, and will help protect your credit score.

“If they’re not providing their half of the rent or their half of the utility payments, you still have to make those payments in full. So that puts the responsibility fully on you as the responsible party in the lease or the utilities,” he says.

6. Set ground rules

A great way to prevent conflict with your roommate is to create a roommate agreement, says Tayne. Roommate agreements are non-legal agreements that set boundaries, she says.

“It’s not a lease, it’s not something you’re going to take to court with you if somebody violates it,” says Tayne. “It’s basically having an understanding so there is no miscommunication later on.”

Rules pertaining to guests, pets, chores, what can and can’t be brought into the home, alcohol and smoking, and how certain shared living spaces will be used are all examples of what to include in your roommate agreement.

“It absolutely should be in writing, in a document that everybody understands and everybody signs so that there’s no miscommunication or misunderstanding about what some of the ground rules are,” says Tayne.

Lastly, make the ground rules of your agreement clear and visible by putting them on your refrigerator or bathroom wall, says Tayne.

7. Create a cost management document

Making sure the rent and utilities get paid on time can be a major point of stress for leaseholders with roommates. You’ll want to discuss with them how and when payments will be made and to make sure everything is documented and understood before they move in, says Tayne.

Sit down with your roommate to determine how you will split the rent and what expenses will be shared, and create a budget, Tayne says. Then decide how the money will be collected (cash, check, cost sharing apps, etc) and on what date the money will be owed.

Then, create a document where everything is written out, says Tayne. She recommends creating a cost management spreadsheet that details your budget on a weekly or monthly basis, but it can be something simpler depending on your needs.

“It could be an app, it could be a simple Word document that you created that itemizes what the expenses are, it could be as informal as on the refrigerator just a note saying who bought what,” says Tayne.

Here are some ideas:

  • List money owed and payments made by each roommate on a whiteboard or note on your refrigerator.

  • Get a money jar where roommates can deposit cash to contribute to shared expenses.

8. Schedule regular roommate meetings to touch base

A great way to ensure good communication with your roommates and avoid conflict is to schedule regular check-in meetings with them, says Tayne. These meetings can be once a week, once a month, or every few months depending on your situation, and will give you both the opportunity to discuss any grievances, issues or concerns, she says.

9. Protect yourself from fraud

Living with someone puts you at risk for fraud, according to Tayne and Griffin. Never give a roommate access to your finances, such as bank accounts, debit or credit cards, says Tayne. Take advantages of money sharing apps like Venmo that will allow you to split expenses without sharing personal information, she says.

A roommate may also try to access your financial information without your knowledge, according to Griffin. If you’re living with someone, he says it’s important to check your credit history at least once a year to make sure you haven’t become a victim of identity theft.

10. Use your shared apartment as a credit building opportunity

Leaseholders can build credit by asking their landlord to report their positive rent payments to Experian, says Griffin. Experian doesn’t charge for the services, Griffin says, but third party organizations may charge landlords a nominal fee that can get passed on to the renter. You can also take advantage of free credit-building programs like Experian Boost that allow you to report positive utility and cell phone payments , which can help you build your credit score. Your credit score will not be impacted by non-payments, he says.

“That may help strengthen that roommate relationship, and also incentivize you to make sure those payments are made on time,” says Griffin, “because it will add to your credit history those positive payments every month.”

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