Credit Score Examples

22 Replies

Hello all, 

Can fellow landlords give us examples of minimum credit scores they accept for their properties, and the rent of those properties? Thanks! (Ex. Minimum 600 score for a $1k/month SFR...etc.)

600 credit 

Documentable monthly income = 2.5 monthly rent.  

No evictions.  

No utility bills in collection.  Some wiggle room for medical bills.  

The ability to speak in complete sentences.  

Demonstrated self respect and respect for others. 

Positive for people who drive crappy but paid-off cars.

Negative for people who just leased some car they can't afford.   

Thanks, @Tom V.   Are these A, B, C, D properties?

B properties in Northern California.

Credit scores don't mean anything look at over-all credit and most new landlords will only look at one-credit report when they should look at all three-credit reports because they could have different information, and if you are pulling only Trans Union, they are the weakest of all three bureaus.



Joe Gore

@Joe Gore , can you be more specific? 

@Dane Fossee

Let's say a person with no credit history apply for a Cap one card their score will shoot through the roof but do that show they pay their bills not all because there are no credit histories and that is the reason to look at over-all credit. And about Trans union everyone run to them because it is easy to pull from them and how do you know you have the whole picture with the only one-credit reports.


Joe Gore

@Joe

What you're saying is not entirely accurate. The problem here is looking just at the credit score. If you're pulling credit reports you'll see the whole thing:

  • Summary
  • Tradelines, which includes if they're paying on time, how long they've had the account for, etc
  • bankruptcies
  • charge offs

In general there will be slightly different information from each bureau, specifically when it comes to newer accounts, but generally speaking the tradelines and debts get reported to all 3 (Experian, Transunion and Equifax)

I've never ran a credit report on any tenants.  Some of my best tenants don't have any credit.  My rentals are < $1,000 per month.


Frank

@Ariel Ozick

I disagree a lot of creditors only report to one credit bureau so you need to look at all three bureaus to see if you miss anything.

Joe Gore

I will sort of agree with Joe Gore.  The three bureaus are not all the same.  They are in some manner geocentric.  So depending on where the creditor is in the nation, they have a high propensity to report to the more local bureau.  Trans Union tends to be West, Experian tends to be Southeast and Equifax tends to be Northeast.  National creditors will be more inclined to report nationally but I have seen those at times limited in reporting as well.  

Creditors do not pay to report to all three agencies every month.  Some creditors do not report at all.  The best bet is always a tri-merge report with all three.  The vendor of the report also matters as not all access is the same.  

I do agree, that reviewing based on a score only can be misleading on both sides of the spectrum.  A good debtor can be disqualified and a bad debtor can qualify.  It's always good to look at credit history and practices for a more rounded idea of how the debtor treats credit.  Long existing trade lines are always good first line of defense in review.  

The other ideas that Tom V mentioned are certainly good ideas to consider as well.  

I do credit reports on everybody.  Just transunion, that's what my service offers.  At the level I play, ALL my applicants have bad credit.  But what kind?  I pretty much ignore medicals.  Big red flags are a whopping bill to an apartment complex, or to the power company.  I also don't like reports where there's just all sorts of crap sprinkled evenly over time.

   Super high credit is also a danger sign.  You have a FICO of 750, and you want to live THERE?   Hmm, could you really applying for somebody else?

   Interesting stuff turns up in credit reports.  Public records.  Addresses that they didn't give me in the application.  Evictions that didn't show up on the eviction report.  

   I use Google Streets on all the addresses.  Where have they lived?  One lady gave me an address that turned out to be a tropical fish store.  Guess she was bunking with the Bettas.

@Dion DePaoli

It is ok to disagree with me, but Experian is big on the West Coast and Trans union in the east and Equifax everywhere in between.


Joe Gore

Originally posted by @Joe Gore:

@Dion DePaoli

It is ok to disagree with me, but Experian is big on the West Coast and Trans union in the east and Equifax everywhere in between.


Joe Gore

 Joe, I suppose that too could also be a little vendor driven.  Not worth a debate.  I think our points are relatively the same otherwise.

Originally posted by @Dion DePaoli:
Originally posted by @Joe Gore:

@Dion DePaoli

It is ok to disagree with me, but Experian is big on the West Coast and Trans union in the east and Equifax everywhere in between.


Joe Gore

 Joe, I suppose that too could also be a little vendor driven.  Not worth a debate.  I think our points are relatively the same otherwise.

 

Dion Depaoli

I agree not worth a debate.

Joe Gore

@Jerome Kaidor  , what kind of properties do you rent? Can you give us an idea of the credit profile of one of your current tenants?

@Dion DePaoli & @Joe Gore 

This used to be the case but I have not seen it of late, certainly not on the national vendors.  I am not arguing about the smaller, local vendors, who may not report at all, but most of the big banks and credit unions using co-branded cards will report. 

I also have not seen that many tri-merge reports on the tenant screening side of things. Primarily b

My post got cut off. What I was saying was I don't see that many TriMerge type reports on the screening side. It's a combination of cost, demand and also the required software to integrate. But mainly we rarely get asked for it.

@Dane Fossee  To answer your question...

Excellent Score 750 - 830

Good Score 660 - 749

Fair Score 520 - 659

Poor Score 363 - 519

However, using a credit score to determine the strength of a prospective tenant is a minor piece of the puzzle. More weight should be given to other factors, such as rental history, income history, legal history. The credit report is excellent for ferreting out other information, such as that mentioned by @Jerome Kaidor  . Most renters (with the exception of those in A properties) will have lower credit scores... which may be one factor as to why they are renting and not owning. A low credit score or none, does not directly correlate to their ability to be a good tenant. You need to look at the root cause.

Let's be honest with each other,  If tenants had a good enough credit score 600 plus they could purchase their own home, why would they rent.  You can't just look at the number.  When i look at a credit report, If a tenant has had an eviction, look to see if the judgement was paid off.  You have to remember that in this economy people are living from paycheck to paycheck, and if they loose one day of pay (holiday), they might not be able to pay all their rent, or even worse their utilities. 

When we look at a applicant we look for the ability to pay rent and the will to pay the rent.  what that means that if they have had an eviction, I may require 2 months rent as security deposit, but I know as long as I don't give the many room to be late and  I send my 5 day notice right when the rent was late, and file my unlawful detainer, I can usually have someone of the property in less that 60 days (hence double security deposit).  Also I require that the tenants have either paid back their former landlord, or have document payment arrangements (with payment history) to repay the landlord.  My theory if they didn't pay the former landlord they won't pay me. Also I look to make sure if their are any judgements or collections.  If there are judgements or collection maximum amount that can be garnished from someone's pay check at one time is 25% of their gross income.  So if you want to live in one of my properties you all applicants on the lease need  to have an income of 3 months rent after the 25% is deducted for the garnishment.  

You have to be very careful when looking at evictions, here in Virginia it is unheard of for apartment complexes and large Management companies to work out payment arrangements with tenants.  They automatically file unlawful detainers on their tenants, which are reported immediately to the credit bureaus.  If they pay before the court date it would still show up on their record as $0 gal (No dismissed).  So technically it looks like they were evicted.  Also if they are any outstanding balances on the eviction databases, and the tenants are moving  out of the property because their lease has expired, you have to be able to read between the lines, like someone at the company forgot to send in the notice of satisfaction... I have never seen a landlord of any kind let a tenant stay in a property after a court date that has a balance still owed.  

So what I am trying to say is really look at the dates of the eviction before you just pass over someone because an eviction pops up.  It could have been months ago and the landlord just forgot to send the required documentation.  

I agree with those that suggest that you don't just look at the score. The score is the symptom, but you really should be more concerned about the cause. 

For example - When I moved to Southern California, I applied at one cute house, that had been offered for rent for 2 months - so, obviously it either didn't fit most tenants (only 1 bedroom) or the landlord/Property manager was too picky. 

I don't know what my score is, but I had a long discussion with the Property manager and told him that I owned a lot of properties, free and clear, in Atlanta and that my rents alone are about 4 times the rent. And that I had a little side business and overall I made about 10-12 the rent per month. He asked:'oh, so you don't have any mortgages on these houses? And you don't have any credit cards? And you don't have any other outstanding debt? Then your credit score is probably pretty bad.' I never heard back from them and the house was still empty 2 months later.

Just saying, that sometimes there might be reason for a particular score, that shouldn't really matter to you and it's much better to look at the circumstances of your tenant, than to go by a number.

Originally posted by @Lisa Doud:

Let's be honest with each other,  If tenants had a good enough credit score 600 plus they could purchase their own home, why would they rent. 

 In our area because they can't come up with the down payment, don't want to be tied down if they get a better job, don't want to deal with managing a property and are generally spooked by real estate.

Originally posted by @Lisa Doud:

Let's be honest with each other,  If tenants had a good enough credit score 600 plus they could purchase their own home, why would they rent.  You can't just look at the number.  When i look at a credit report, If a tenant has had an eviction, look to see if the judgement was paid off.  You have to remember that in this economy people are living from paycheck to paycheck, and if they loose one day of pay (holiday), they might not be able to pay all their rent, or even worse their utilities. 

 As I read all of these responses, I feel like I am some sort of anomaly.  I never owned a house until just very recently.  I rented my entire life.  I had (and have) a good credit score (almost in the excellent range).  

Not everyone wants to buy a home.  I never did (until recently).  I was single, loved to travel, and just didn't want the hassle of owning.  

Not sure you can assume that someone who has a good credit score isn't a renter. 

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