Renter? regarding credit checks

19 Replies

I have a question regarding credit checks. I am a renter. This is a position that we are, unfortunately, stuck in for at least a few more years before we will be able to purchase due to past credit issues. We are in the process of looking for a new, more suitable place to rent (this one has a lot of problems and it is just not what we need or desire in home). I was wondering what exactly you look for when pulling credit reports? For example, both mine and my husband's FICO is around 590 due to old collection accounts (5+ years old, most due to come off our report within 2 years) but all of our current accounts are 100% paid on time. We have no foreclosures, bankruptcies, or evictions. My husband has stable income that is 5x the amount we are looking to pay in rent. Based on this information, would you rent to us if we applied for one of your properties? Why or why not? I know this is long, I am just wanting to get a bit of perspective before we actually have to deal with it in our home search.

Thanks in Advance,

Amanda D

5x verifiable income and most negative credit issues being years old would be ok with me. I personally don't care that much about the score as much as what the negatives were and how long ago they were.

Be up front with landlords. That will help.

Thanks for the replies. @Chris K. Thanks for the insight. This is how I thought it worked, but since I have not dealt with anyone who actually ran a credit report for a rental before, I simply wasn't sure what to expect from that process or how the information is really utilized by landlords or property management companies.


Your income being so high would be a red flag, I'd be concerned you wouldn't stay long. Maybe include a note of why you are looking for such a lower priced unit and assurance you hope to stay for a few years. When you tour units you could ask how long their average tenant stays.

On credit report I am looking at how much and what kind of debt. Medical and credit cards aren't as worrisome as utilities and former landlords. Otherwise I'm looking to see if the facts match the application, especially the prior addresses, which are listed.

I would not assume you are doomed to rent for much longer. There if you have 20% down you can get a loan 2-3 years after a short sale. there are several ways you can get into a property much sooner, many bee now:

1) Sounds like you have a good income, ave up for 20% down.

2) Finad a bank loan for 80% and an owner that will carry the difference between you down payment and the 20%.

3) Find an owner that will do seller finance and cut the bank out entirely.

Good luck to you and your husband.

During my screening process, I ask prospective tenants about their housing needs, rental history, income history, credit history, and legal history.

For Credit History...

1. We run a credit check on every applicant, is your credit history good? If not, please explain your situation. What steps have you taken to improve your record?

2. Do you currently owe money to any person or business? If yes, how much and to whom?

----

I'm looking for open and honest communication. Was the application filled out completely and accurately? Does it match information I see on the credit report (including past addresses)? I am looking for a demonstration of responsible behavior. If the debt is to a previous landlord or utility company I would require those debts to be paid in full prior to renting to you. Looking forward, how well do you handle money now? Is your verifiable household income sufficient? If I am taking on more risk by renting to you, I will ask for more security deposit.

I suggest you get a copy of your credit report from all three reporting bureaus and take steps to improve your record. If there is erroneous information on your credit reports (highly likely) get it corrected as soon as possible. Also, give me a list of all your previous addresses for the past 10 years... I will look for gaps. List all your debts and take steps to settle them. Get documentation when you have settled a debt.

Don't blame others for your situation or give me a long back story. Present yourself well on the phone and in person at the showing. If I am asking for more information from you, there is a good reason. I will ask you what kind of place you are looking for and want to make sure my property will be a good match for you. If you are a good tenant (pays rent on time, takes care of the property, follows all the terms of the rental agreement, doesn't cause me any trouble or drama) then I will want you to stay a long time.

Good luck!

@Marcia Maynard,

When you said you ask for a 10 year address history it made me laugh because some of the bureaus don't show a 10 year address history. I understand most new landlords come up with things that they saw on a late-night show.


Joe Gore

@ Joe Gore, the more information that can be verified the better. It establishes a baseline of openness and a willingness to accept help. If one is to accept an applicant that has some issues, a smart landlord will either say no right away and not mess with it or collect more information to get a better read on the situation to make a more informed decision. Joe, I am glad I learned a long time ago that I don't know everything and that there is always room to grow. At least you condescending remarks are consistent.

I look for open communication. I want someone that has the income to pay rent, will take care of the property and can communicste effectively.

@Kyle Hipp,

I was a silent partner in a large complex in Dallas for over 15 years, and I have interviewed tenants from all walks of life, and a three-year address was ok with me. I see landlords that don't know how to talk to a tenant, and tenants don't know how to talk to a landlord, and most landlords don't visit the tenants to see how they are doing or if anything needed fixing. I walk the property every day and stop and talk to the tenants and see if they need anything, and yes I had to evict some tenants, and I was very swift on filing, and once I file there is no talking start packing.


Joe Gore

joe, that is great that 3 years was good enough for you in you market and in the large complex segment of renting. Just because someone does something different than you doesn't mean they are not doing it correctly or are inexperienced. Single family, duplexes and triplexes and larger apartment complexes require different tweaks on screening process considering clientele makeup and market. For the OP's question, providing more detail in an application process is helpful in the qualification process so it was good advice on that end even though many landlords might not require that amount of detail.

I don't visit my properties daily and many on here would say that is a waste of valuable resources. I do visit them monthly and have good communicstion with all my tenants though that does assist in many situations. Good day

@Joe Gore I will carefully examine the most recent 5 years of residence history. But I may ask about the last 10 years if I want to know more about their stability or their pattern of frequency of moving. My Seattle address from the 1980s still shows up in my credit history. I am not a new landlord (19 years experience) and as @Kyle Hipp says, the more information that can be verified the better, especially with prospective tenants who have some issues.

If you are communicating with tenants, walking the property, asking if tenants need anything and evicting tenants, then by definition you are not a silent partner but an active investor. It is a big, big difference in what was agreed to in the investment and a big difference when it comes to filing your tax return.

Amanda, sorry I didn't reply to your question. Credit score is not the end all point in tenant screening. I look at the number, type and how recent collections are. I look at whether there was a bankruptcy and what has happened since. I look at public records for criminal convictions and evictions. I have some wonderful tenants that went through a bankruptcy and lost their home because of unforeseen circumstances.

If I were in your situation I would take personal action on my own credit report. I did this myself many years ago. I would select three of the negative items on the report and dispute them with all 3 major credit reporting agencies. Note that this is work and requires patience. Do not accept simple statements such as "collection was verified" or a screen shot from the credit reporting agencies data base. Ask for a copy of the original documentation to validate the dispute. Remember that they only have 30 days to investigate and if they can not produce this demand that it be deleted. You want items deleted if possible, not marked as paid off or charged off.

You will likely be able to get many items removed in this way and others you may not but in the end your situation can be improved greatly. If there is any partial information listed demand it be fully documented or deleted as well. Watch that items age out as they should and become familiar with the law on credit reporting and collections.

@Mitch Dowler,

I am a little slow here can you point out in the FCRA where the credit bureaus must provide a consumer an original documentation that the debt was verified.


Joe Gore

@Michele Fischer , our income isn't very high. In this area, it is very reasonable to expect a decent home for around $500-$600 per month (our current place is $450). So not really red flag inducing, lol.

Getting collections off of your credit report is easy. Almost as easy as getting old addresses off.

@Amanda Damron back to your original question:

No your low credit score is not a disqualifier for me. As others have said it depends on the type and age of the negatives on your report. I also don't disqualify foreclosure/shortsale/bankruptcy. Many people got caught without a chair when the music stopped a couple years ago. A tenant I have now actually moved in from the house she was doing a deed in lieu of on at the time she was looking to rent. She was upfront about why she was looking to rent and told me she was losing her house.

Honesty, and time, goes a long way in making "negatives" not so negative.

Amanda,

You said your income is 5x rent. This may be responsible, but is not the norm. Especially in a low income neighborhood, I'd want to understand why you aren't following the typical path of maxing out what society says you can afford, 3x.

We simply prefer to live below our means, as my husband's work is affected by bad weather. By keeping bills relatively low, we don't have to worry as much about falling behind when we have a spell of rain or snow that causes him to not get his normal amount of hours. It also allows us to have a small emergency fund.

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