How important is the actual tenant’s credit score, and the number, in terms of ranking factors in tenant screening? Veteran landlord and property manager Hank Rossi, who is both a rental property owner, landlord and property manager himself, takes on this question and others from landlords and property managers around the country about their rentals
Dear Landlord Hank:
How do you rank the importance of a credit score when evaluating a tenant? Are there other things more important like previous landlord recommendations and references? We have a potential tenant with a low score but everything else looks good.
Dear Landlady Maria,
I place heavy emphasis on credit worthiness of an applicant but I don’t rely on FICO number alone because there are too many components that affect the score.
Did you know that if a person’s credit is checked when they apply for a credit card their score could be reduced by as much as 20 points? Apply for a few different credit cards and your score could really dip.
Also, find out why a credit score is low. Was the reason divorce, loss of job, or medical bills with uninsured situation?
How long ago did this event happen? Are life circumstances better now? Or is there a lack of fiscal responsibility not related to one situation but a life style?
I’m more willing to consider someone with less than stellar credit if I can see a reason why the credit score is poor and proof that bills are now current.
On the flip side, I want to see that income is sufficient to cover current bills, including the rental and utilities and associated costs (moving, cable, internet, etc).
Tenant job situation and rental history in addition to tenant’s credit score
I want to see that the applicant has been on the job at least six months, makes at least three times the rent and that current job is full-time and not short-term.
Next, and most important to me is rental history.
This must be absolutely verifiable. I want two good residential history references, no evictions.
Do some digging in this applicant’s credit file and find your answers.
You could also ask for more up front rent or deposit to reduce risk.
Other recent Dear Landlord Hank posts you may have missed:
About the author Landlord Hank:
“I started in real estate as a child watching my father take care of our family rentals- maintenance, tenant relations, etc, in small town Ohio. As I grew, I was occasionally Dad’s assistant. In the mid-90s I decided to get into the rental business on my own, as a sideline. In 2001, I retired from my profession and only managed my own investments, for the next 10 years. Six years ago, my sister, working as a rental agent/property manager in Sarasota, Florida convinced me to try the Florida lifestyle. I gave it a try and never looked back. A few years ago we started our own real estate brokerage. We focus on property management and leasing. I continue to manage my real estate portfolio here in Florida and Atlanta. “ Visit Hank’s website here.