How to judge renter credit checks results?

Question

How do i judge a renters credit check results?

How do i tell a good renter from a bad one based on credit report.

Is there a minimum credit score they should be that tells me how bad they are?

Trying to get a idea of what makes a good renter and what does not.

Thanks

Rolanda Eldridge · Answer

I don't look at the score but I do examine, the report..

1.  What payments missed /why..if utilities show(c/o) it's a bad sign.(need lights and water at property)

2.  How long ago was the late/charge off

3.  No evictions or judgements....case by case..

4. Does address info on credit report match credit application..multiple address on report, but not listed on app..not good...probably a reason it's not disclosed..

I recently took an application on someone with a great job, but no verifiable rental history..a 30K car loan on report, but basically doesn't pay landlord and moves around a lot....PASSED ON THAT ONE!

Good rental history and work history..Required....

James Wise · Answer

People that pay their bills = generally pretty good

People that don't pay their bills = generally pretty bad

Richard C. · Answer

They must be ice skating in Hades, while dodging porcine aeronauts.

But I agree with Joe Gore.

Account Closed · Answer

Credit scores don't mean anything. Look to see if they have evictions.

Joe Gore

Lisa Wright · Answer

I agree with Joe and most of the others. Credit score isn't, and shouldn't, be the end all be all in assessing a tenants eligibility to rent. While you should still know it and use it, I think eviction reports and current income are a lot more important. Searching criminal records is something you should do too.

If you use a tenant screening agency, most of them will give you their "Tenant Score" or "Renter Score". They will compile all the data and results from all the reports ran, credit score included, and give you an overall suggestion based on their qualifications on whether or not you should rent to them or not.

Some landlords or first time users like these features, some don't. My personal opinion, the more information you have the better. However, basing your decision to rent to someone on credit score alone is not something I would suggest, get all the info together and then make your decision.

Robert Fielding · Answer

I wouldn't say you are going against the grain Kimberly. I think most landlords look at the score provided by the bureaus as a starting point at the very least. 590 or 600 seems to be a common minimum as well.Nationally, the average renter has a 623... that's your bread and butter right?  I read a recent statistic that stated renters with credit scores between 600-649 carry a 31% delinquency rate...

Stale bread my friends, stale bread.

Kimberly T. · Answer

Well I'm going to go against the grain here a little, because the credit score is part of our criteria.  We require a minimum score of 600, but as others said, I still don't want to see a bunch of collections, etc. on their report.  Basically, if the score is below 600, they are automatically denied, but if it's over 600, then we check out the rest of the report for collections, etc.

Also definitely want to check that the name and SSN match what you input.  If something doesn't match (and you input the info correctly, so it's not your error), that is a huge red flag.

Colleen F. · Answer

I look at the payment history not so much the score.  Do they have credit , if they do are they making payments regularly.  Lots of ontime payments means they don't consider it ok to be late.   Do they have lots of cards with high  balances in comparison to what they make?  in a borderline case that makes me go against them.    I  agree that if you have utilities not paid that is an issue.  I do tend to disregard a missed phone payment because I have to say given the solicitations of some phone companies well I can see how you would mistake it for recycle...

Robert Fielding · Answer

I'd like to chime in if I may.

I believe that this information is relevant to the proposed question and my reply should not be considered an unwarranted solicitation. :)

The problem with judging tenants based on their credit report is just that, the credit report.

Jay Harris, Senior Director of Business Development, CoreLogic SafeRent has said, “the old rules – like evaluating applicants based only on credit scores, or turning down applicants with little or no credit history – may no longer be sufficient to keep net operating income (NOI) at an optimal level.”

Credit reports do not do a good job at providing relevant data that assists in determining an applicants current spending habits and ability to pay rent. Credit reports simply provide a history of an applicants past trade lines and fairly often, rent is not one of them.

Additionally, credit reports do not reflect alternative lending, and knowing that the majority of renters are sub prime or borderline sub prime, this means that your renters will likely have monthly debt obligations that you are completely unaware of when calculating their debt to income ratio. (E.g. Rent-To-Own, Pay Day / Cash Advance Loans, Sub Prime Auto, Cell Phones, Court and Child Support)

So what is the solution?

Bank Statements!

Bank statements provide you with relevant data directly related to an applicants current spending habits allowing you to accurately determine their ability to pay rent and with Instant Account Verification here at DecisionLogic you can instantly view an applicants bank statement in real-time!

DecisionLogic's IAV Service allows you to better qualify prospective tenants while making a faster and more accurate approval decision. Our service instantly provides proof of identity, multiple account verification, current balances and up to 90-days of real time bank transactions - all in one consistent and easy to read format.

If you'd like to know more, feel free to give me a call.

Matt Sicignano · Answer

There are some good tips here-I'll try to add something that hasn't been addressed. When reviewing someone "on the line", I try to ask myself whether  a larger deposit might mitigate some of the negatives.

How to judge renter credit checks results?

Most Popular Reply