How Much Weight Do You Assign to a Credit Score...and Why?

Question

Thoughts?

Tim G. · Answer

I've never had a tenant with good credit.

I run it, but just to look for a history and habits. If they have bad credit from not paying a Dr.s bill so they can still afford rent I understand. Healthcare in this country is a mess and they put priority on the roof over their head. That is what I want to see, rent being top priority.

Account Closed · Answer

I don't give it too much weight at all. I look it over and if it isn't horrible, then I base my decision on the rest of the background check. Pretty much everyone that I've ever rented to has a bad score. That's a big part of why they are renting instead of buying.

Alexander Felice · Answer

For tenants?

I did lending for a long time and I've seen hundreds of thousands of credit reports and I will say that credit scores do matter.

The report is definitely more important, and you have to take the client/applicant story into consideration as well. At the end of the day though, a guy with a 550 beacon deserves his score just as much as the guy with the 800.

The credit score is just an algorithm to sum up whats in the report. I did say the report was more important, but the algorithms are pretty damn good. Most importantly, the middle ground reports are the ones you have to dig most into because the bad reports are easy to toss, and the good reports are easy to blindly accept. It's the 650 that has MOST stuff paid on time and some stuff they always forget to pay that are the most volatile in my experience.

Steve Babiak · Answer

There are several different scoring models - FICO, Beacon, Vantage (3 versions of Vantage!) - so first you have to know which model was used to produce the score. Then you have to set a bottom threshold below which you automatically reject - if you ever saw what a 450 FICO looks like in the full report you would understand why.

So you should set a minimum.  I know some people using a point system for scoring tenants who award additional points for credit scores in increments above the minimum.  So you can consider doing that.

Then there is the matter of a very high credit score. Lots of times, the renters with those high credit scores become buyers. So if you are looking for a longer term tenant, a lower credit score might be more likely to stay (at least they are less likely to buy).

And the class of rental property is a determining factor also. In a lower income and rougher neighborhood, you shouldn't have expectations of high credit scores. In a more affluent neighborhood, there is greater likelihood of seeing a better credit score.

William Morgan · Answer

I place a high value on them.  While I agree that it may not tell the whole story and a "good tenant" may have fallen through the cracks, my experience is that people who care about their credit rating tend to be responsible as tenants (and in other areas).  They worked hard to get it there and they have more than just a deposit to lose if things go south.

It's scalable. Relying on a good credit score saves me time.  I can simply state a policy, such as filtering by credit score, that anyone can follow without wasting time digging into individual credit reports hoping to find a diamond in the rough.

It's a single data point with IMO significant implications. Banks also place a high value on it - and they'd know more than anyone.

David Moore · Answer

I value credit reports highly, but look for exceptions.  It is one of several pieces to a puzzle that paint a picture of a good tenant, and hopefully longterm, and a poor tenant.

Che Chiu Wong · Answer

To clarify, Brandon, from what perspective are you looking?  From a landlord's perspective looking for tenants? Or from a lender's perspective looking for issuing loans?

Richard C. · Answer

The score?  I assign it zero weight.  The purpose of running a credit report on prospective tenants is to check for judgments and address history, not to see if they have $460 charged on their one $500 limit credit card, and thus have a 600 FICO.

How Much Weight Do You Assign to a Credit Score...and Why?

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