Tenant does not have a credit history

19 Replies

I am screening a tenant who is more than 40 years old. She passes criminal and eviction checks, but not credit check. My minimum FICO score is 621. The service I use just tells me whether she passes or not - nothing more than that. In the application she wrote that she never uses credit and deals with cash only. Otherwise (references etc) she is OK. Could someone live in US for a long time and still have no credit history? 

No credit history, if it's part of your rental criteria,, which you say it is then she does not qualify.

Deny. 

Ya it's possible no credit history, it's also possible she's not legal citizen.

No credit history also means she has no debt so she would have an easier time paying the rent than someone one with car payments and credit cards!

No credit history can mean a lot of different things, she could be using a alias. You need to get a copy of her drivers licence and employment history. Ask to see at least three consecutive pay stubs and contact her employer to confirm.

Without a credit history you must go the extra mile as they may or may not be legitimate. Dig much deeper.

You also need to change credit checking companies immediately. A indivulaes personal credit history is the most important part of screening the actual score is only a small part of a persons credit history. You need 30-60-90 day default history, credit limit and credit used to form a full picture of a indivulaes credit history. You have been lucky to this point using only a credit score.

She may deal with cash, no law against that, but it shows poor personal money management, that's not saying she doesn't pay......and obviously she does or she would show up in collections at the courthouse. 

But, she does have "credit" past rents, utilities need to be paid on time, cable bill, insurance, all such expenses that are ongoing paid to others establishes a credit line even if she pays cash, she paid when due or acceptable. 

Saying cash includes paying by check, ask for the last year's bank statement or past few months, you'll see how her cash flows and what she spends and look at deposits.

What's the last landlord say? If she's good take her!  :) 

I use TransUnion SmartMove to screen tenants. It failed to find history on a nice latino family with no bank account. Employers and landlords gave good recommendations over the phone. They are great tenants, paying by direct deposit. It is not my concern whether they are documented.

Trying not to sound too demeaning here, but using FICO as your guidepost is almost worthless. FICO can be high or low depending on a lot of factors that may not have too much bearing on whether or not she is going to be able to afford to pay rent at your place and whether she'll pay on time or not. Someone else said it already (I think it was @Thomas S. ), but you need to look at the individual components that make up that credit history for applicants. I'm personally more interested in the number of accounts outstanding, proportion of balance to limit, how often any have been late, and the nature of the accounts than anything else, because the first month the tenant has to choose between car payments for husband, wife, daughter, and mom, and paying the rent, they're going to choose the car payments. 

Thanks Jd. Could we request a tenant to provide complete credit report ? The service (e-renter) I use only provide a binary result based on a set criteria I set. In this case I set it as "C" which requires a minimum of 621 FICO with these exceptions: Medical Collections, Paid Collections, Collections Less than $100.00, and Judgments under $500 are not used in determining a grade

Ditto @Bill Gulley , lots of ways beside FICO to check a person's history. Generally you can find other evidence of life cleanly lived.  

Remember your criteria, and screening process should be same for all.

You could ask to see copy of Income tax records and anything else she has to document income history and payment records.

It's just how much time are you going to spend on her.

You could require big extra security deposit but then you'd set a precedent for other that don't reach your now criteria. 

I'd personally ask her for a co-signer with established credit that will pass the threshold. but then you may need to accept co-signers for other's that want to rent in the future. 

Originally posted by @Navin Naik :

Thanks Jd. Could we request a tenant to provide complete credit report ? The service (e-renter) I use only provide a binary result based on a set criteria I set. In this case I set it as "C" which requires a minimum of 621 FICO with these exceptions: Medical Collections, Paid Collections, Collections Less than $100.00, and Judgments under $500 are not used in determining a grade

 These binary go-no-go services are a waste of time and money and this topic shows you why.  You must get the real TRW, Transunion, Equifax reports to see the tenant as they are; cash paying consumers with utility & cellphone bills.  Their payment histories and collections will be what you need to vet these applicants.

Go on other criteria- how long has she been in other rentals? 

call prior landlord...

work history? 

income ? 

If all thta is good, it's a go! 

some people just prefer pay cash-the old fashioned way!

Originally posted by @Deanna McCormick :

..

Ya it's possible no credit history, it's also possible she's not legal citizen.

Requiring somebody to be a citizen is potentially a violation of fair housing regulations. Perhaps you meant to write "legal resident". It is quite possible for somebody to have legal entry into the USA and have no credit history; when the proverbial "green card" is issued, I believe a legitimate SSN is also issued - and the service should be able to identify that the SSN and the identity of the applicant are for the same person.

Not to say this is the case with this tenant but every tenant I have ever had that paid in cash and did not have a bank account was hiding from someone. Usually creditors.

Credit history-or no history-is just one of a number of tools you use to determine the prospect's eligibility. If they have no credit history, but all other signs check out favorably, why wouldn't you rent to her? She has no criminal history either, right?

Histories are but pieces of the puzzle. Sometimes there is no data, so you have to go without it. If all else is good-and verify it is-rent to her.

You may want to ask for first and last month's deposits or a separate utility deposit to protect yourself if you think it is warranted, but the info you provided here sounds good.

Thanks everyone for your inputs. Her past 2 landlords and employers gave good feedback on her.  No criminal or eviction histories. Also she came across as a decent person when I interviewed her. So I am leaning towards approving her application. 

Zero credit history is better than bad credit history. There are still other ways to screen her. Ask her for previous rental records: three previous addresses, the rental dates and contact details of former landlords. You can request for employment records as well.

@Navin Naik You didn't make any mention of her income level?  If you do not have a minimum income requirement included in your minimum screening criteria I suggest implementing one.

Hello Michael, my income requirement is 3x the rental cost and she met that requirement.

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