Where do i draw the line in saying yes after tenant screening?

Question

Hello everyone,

I have been getting great feedback so far so I decided to reach out for help again and post another question. I have screened my first tenant and after review i decided i wasn't really sure what an average or just bellow average background check and credit report would look like. I am curious in where a landlord draws the line between yes or no. Any help is appreciated!

Thank you

-Bill

Nathan Miller · Answer

Account Closed - I suggest creating written screening criteria and sticking to that criteria.  As others have mentioned, you can end up in hot water if you don't.  You can base part of your criteria on a FICO score if you want, but I like to be more specific.

• Minimum FICO score of 600
• No current credit delinquencies
• No past evictions
• No criminal convictions
• 3x rent
• Positive rental references

I like to list the criteria on the rental listing itself so you save yourself the time of eliminating those who don't qualify.  They just don't apply and it saves a ton of time.  Here's a link to a guide we wrote last year on setting your written screening criteria, might be useful:

https://www.rentecdirect.com/blog/2015/10/how-to-create-written-screening-criteria/

Tricia Starks · Answer

Tenant screening varie Depending on the market and location of property..  Here are some general criteria.

1. I ignore credit score but look at credit history.. number of outstanding accounts..how have they paid their accounts in last 3 years. Do they have so many creiftors that they are a candidate for bankruptcy?

2. Rental history last 3 years. Apartments are a great record keepers..

3. No  prior evictions

4. Must be able to past background check

5. Number of adults and children living in the house..as defined by law allowance. red flag .. this helps to keep repairs to a minimum

6. Income must 3 to 4 imes greater than rental amount and depending upon how much debt they carry.

7. How long have they been on the job but I will accept job transfers or new hires if income can be verified.

JD Martin · Answer

Our firm criteria:

>3x monthly rent (i.e. rent is $800, income is >$2400)

No serious or recent felonies

No evictions

No active or recent bankruptcies

Verifiable income (job, disability statement, etc).

Other information just enhances the basics. If someone meets all of the basics but has a horrendous credit record, they are denied. We don't bother looking at the credit score - I look at the actual credit accounts. I'm looking for a history of slow/no pays, charge-offs, excessive revolving balances, unclaimed expenses (car notes, etc), and recent financial troubles. We might disqualify someone based on misdemeanors if they are excessive or disruptive in nature - i.e. disturbing the peace, non-felonious intentional property damage, etc. I don't really care too much about speeders or parking meter violators; what I'm interested in is someone who can, and does, pay their bills, and doesn't have a verified record of being a pain in the ass to the landlord, neighbors, or neighborhood.

We list our criteria on our website so that everyone knows what it is before they bother applying.

Thomas S. · Answer

Set your base standards as Neal has stated. No exceptions.

When reviewing the credit report remember it is only part of, although a major part, of a overall picture. You not only consider the number but it is essential that you consider the % of their credit limit they have available. If they have or are close to maxing out their limit they are a higher risk.

Look at employment history as well. A new job, less that 3 years is a higher risk as well.

You look at all factors that you believe pertain to your specific property, do you have other tenants, is it a quiet building, do your tenants work nite shifts, will young families with children be a good fit etc. etc.

I know someone is going to jump in with the usual "fair housing" cry but you need to consider whether the applicant will fit with other tenants or if they may destroy your property etc. Applicants are not people they are simply a collection of facts you consider regarding fit for your business. Take a close look at their presentation, attitude, condition of their vehicle and their present housing. Talk to their previous landlord as he will have no vested interest in getting rid of them. Always screen applicants 2 months ahead of when your unit will be available. Your goal is to mitigate your risk, if you do not know how to do that you will quickly learn with your first bad choice. Always remember place your needs ahead of all other considerations. Your property, your money, your risk.

Trust no one, they all lie and are hiding something.

Neal Collins · Answer

This is where you want to have firm criteria that you can apply across the board to make it more standardized so you don't run the risk of violating fair housing laws. Our markets are much different so take this with a grain of salt but we use the following screening:

- 650+ credit score

- 3x monthly rent in verifiable income

- No evictions

- No felonies

- Favorable references from previous landlords