Minimum standard for credit score

13 Replies

What are folks using as their minimum required credit score on rentals?

I’ve got mine set at 650 but not sure if that’s too high for a c+ / b- neighborhood. Thanks

We disregard credit score in favor of employment verification and rental history.  If they've always paid their rent, not terribly concerned about FICO.

@Deborah Burian that is interesting.  What are your thoughts on folks without rental history?  

My unit seems to be attracting quite a few folks that are highly interested but they are moving out of the nest for the first time and don't have prior rental history.

This will be my first tenant of my choosing so I am really trying to get a good one.

I agree and echo with @Deborah Burian. We favor  income, employment verification and rental history/no evictions as well. Have had multiple good paying clients with scores in 500s. They paid on-time all months, took great care of our homes and we are now listed as their + references. 

I don't have a minimum credit score to move in.  I think employment, income verificaton and rental history are more important.  Many people have had issues with their credit score and for some it's not easy to get the score up that quickly.  I had a tent with a score in the low 600's from a medical bill he didn't pay when he was 18, he is now 23 and that was the only negative on the credit report.  He worked for the same company for 4 years and his income was more than enough to cover the rent, but the score was keeping him from other rentals in the area.  He has been a tenant of mine for 2 years and he has never missed a payment or have I ever had any issues with his unit when I inspect it.  If you have two candidates that are equal and you are looking for a tiebreaker you could use credit score to choose.  As you stated some of your candidates are moving out for the first time.  They probably won't have a very long credit history at that point.  As for tenants without rental history, you could ask for a co-signer such as a parent just to protect yourself.  However in the end a steady job and consistent income would be the first things I would look at.

I invest in C & D class neighborhoods also not really giving the fico too much attention. As long as there are no crazy judgments against the individual and they have a steady employment history. Also checking their criminal background is also a vital step. Lastly, I might drop by their current house to see how they maintain it aswell as the condition of their car.... hope this helps
@Charles Smith do you also look to see if they've had any prior evictions? and is there a minimum they have to earn to qualify? Thanks for any advice! I am looking into c/d neighborhoods myself.

Great ququestion! Sorry i left that out.... That a BIG RED FLAG! Dont feel bad about about searching for the proper tenate for your property. Set the bar high and weed out the tire kickers with your professionalism. Trust me they wont apply. Do a proper screening but dont discriminate and you'll be fine.

@Brad E. - I typically say 600 for my tenants. But that's only one part of the equation. If the tenants have good jobs that meet the income requirements, a clear criminal background, good recommendations from employers/previous landlords, and I get a good feeling when meeting them. I'd likely ask them about why their credit score was so low. 

It could be something silly that happened recently that they don't know about or are in disputes with. They also could have just started building credit. Amongst other reasons. 

I also have 600 as a minimum requirement. However, I will accept tenants if there rental history and employment verification is solid.

My minimum acceptance is 650. I screen all other variables as previously mentioned but firmly trust the score as a % possibility of default.

Some indivulaes do have a one time event that causes a lower score however 650 is not a high score by any stretch. If they are below that level there is absolutely no doubt they are a higher risk for landlords. My properties are B class making finding applicants well above 650 very easy.

I screen to find the best all round candidate and leave the rest for the hobby landlords..

I agree with Charles Smith, set your bar high, the bad one won’t apply.

That’s why I require my tenants with minimum score of 650.
Although 650 credit score requirement will get fewer applications,
think about it the other way, you are not missing the good tenants (650+ score), the applications you miss are the “so so” group (below 650 score).

I don’t need to feel bad for the tenants with credit below 650 not to apply my rental.

However, it work for me because the rentals are in class B area.
Probably it won’t work in class C/D area.

@Brad E. We use 600 as a minimum in the C neighborhoods and 650 in solid B neighborhoods. The thing to stress is those are your MINIMUM requirements. If they only meet the bare minimum for credit and income requirements then the more likelihood they will be asked to put down additional security and/or be denied. 

People normally appreciate the honesty upfront about screening requirements. Time is of the essence for them just like it is for you. 

Thanks everyone!  This is really great feedback!

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here