What is the average applicants score you require and why? Do you change this for lower income applicants/ lower income neighborhoods?
I'm using an online screening service that says 650 ◄ (Avg. Renter's score)
650 is pretty descent actually for a tenant. I typically require 600 and above. At 620 they qualify to get a mortgage. I think Ive only ever had one tenant with a score above 700. Most of my tenants tend to be in the 600-625 range.
@Luke H. People that need to rent are renting for many reasons. A credit score is one thing to look at but I don't worry about it that much. If they have good credit and money to put down for security deposit and first month's rent then they are probably not that far away from being able to buy. I am more concerned about verifying employment and having 3x net income above monthly rent amount and verifying they are who they say they are. However, I am not denying that a credit score can say a lot about a person's willingness to pay.
I don't even look at credit score. Its more about verifiable employment, income, references and good rental/mortgage history. A lot of good people who make good money, have terrible credit for whatever reasons.
If you pull my score right now, its probably around 620 because I have a lot of money setting on zero interest credit cards that I'm using for flipping instead of paying interest on loans or using my own cash. I'll pay them in full before they charge interest, but I'm definitely leveraging the time they want to give me free money.
A fair number of landlords don't look at credit scores. However, when I run a credit report I find once the FICO gets below 580 or so the number of accounts in collections increase. With "free" online services such as CreditKarma more folks might be aware of their scores.
While we currently require NO history of evictions, NO accounts in collections, income at least 3 times the rent, and stable employment there ALWAYS seem to be those who waste our time filling out applications, forking over the screening fees and being turned down because...surprise! the number of accounts in collections (or course, everyone claims their identity got stolen which caused this).
We're about to either raise our screening fee from the cheap $15 per person we charge or add a requirement of a FICO score of 600 and above to weed out the timewasters.
Minimum credit score required by me is 650. Most of my applicants are in the 750 to 800+ range.
If you do not set a reasonably high base requirement or do not use credit scores at all it would be like buying a used car and not caring what the mileage is as long as the paint looks good.
You might as well be choosing tenants by the colour of their hair if you do not intend to use all the resource information available. Those hobby landlords that do not use the credit score do so because they do not have the knowledge to understand it's value. They will always dismiss it's importance.
620 is my floor. Credit score has proven a better indicator of a good renter than income. A verified high income shows an ability to pay, a credit score demonstrates the actual history of paying.
I've had maybe 10 tenants give or take. My best tenant had a credit score of 800, never a problem, left the unit better than I rented it to him, paid early, cooperative.
Everyone in the 500 range has been an abject loser, trashed the place, didn't pay on time, fought everything, always throwing a fit.
600 has been decent. I'd prefer 700 score minimum, but if they had that then they'd be owners not renters...
Thank you everyone for replying. Very good information.
My new score is +620. The online service I use will just let me know if they score 600-700 or not.
I've never used FICO as a discriminator (ie a criterion). Instead, I look at 30,60,90 lates for the last 6 months and the collection accounts. This tells me about their current living whereas FICO tells you about their past :sigh:
Verify employment AND income and contact last TWO landlords.
The FICO is looking at the 30, 60, 90, lates as well which is part of where the score comes from plus a lot more. Nothing on the report for the last 6 months tells you anything other than the last 6 months. The FICO predicts the probability of their likely actions in the next 6 months.
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