How much weight do you give credit scores in screening tenants? Each week veteran landlord and property manager Hank Rossi answers questions from other landlords and property managers around the country about their rentals. Here is this week’s question:
Dear Landlord Hank:
Do you use credit scores in considering tenants? How important do you think scores are in tenant selection? I read a story that in big cities some landlords want scores over 700.
Dear Landlady Eileen,
I think credit scores are very important in evaluating a tenant.
Next to prior rental history that is the next most important criteria for me.
Credit history is unreliable in some cases. For instance, in some situations a very young applicant may not have had enough life or time to develop any credit. Also there are some prospects that truly pay for everything with cash.
Then other times, folks are victims of identity fraud and credit history is skewed.
I won’t take a tenant with a bad credit history that shows lack of responsibility, poor judgment and/or sometimes a sense of entitlement. I don’t want that kind of tenant.
Also, I find failed marriages are sometimes a big contributor to a bad credit history. In that case, you must evaluate credit before the marriage and then during and after the marriage.
If credit scores show lack of payment you may be next
If you find someone that has many accounts and they aren’t paid regularly, you will probably be joining those ranks if you accept this client as a tenant.
I used to take a larger deposit to guard against not being paid rent but then I’ve had to evict.
Credit score is one very important factor in an overall evaluation.
Make sure YOU are the one that runs the credit. Don’t take a tenant’s copy of their credit report.
You need a current report for a fair evaluation.
About the author:
“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.