I have received 3 applications from a group wanting to rent a unit, however two stated they have bad credit and one has no credit. Can I deny them based on this information alone, or do I still have to have them to pay for the credit check? It's likely going to come back negative and I'll deny them, so shouldn't I save them the $25? My gut says not to rent to them regardless, but I haven't ever denied a rental app, so I'm not sure exactly what to tell them.

Make sure your listing specifies your rental requirements. Yes, you can absolutely deny them for bad credit if you choose. 

Originally posted by @Erin Hauser :

I have received 3 applications from a group wanting to rent a unit, however two stated they have bad credit and one has no credit. Can I deny them based on this information alone, or do I still have to have them to pay for the credit check? It's likely going to come back negative and I'll deny them, so shouldn't I save them the $25? My gut says not to rent to them regardless, but I haven't ever denied a rental app, so I'm not sure exactly what to tell them.

Yes absolutely. That's what I do. Ask them to fill out the application to the best of their knowledge. If any information they have filled out is not satisfactory, I don't even run the credit check. Why waste their money for no reason. 

Run the application and the credit. This may be a negative way to look at things but it almost sounds like you are being baited into denying them without running an application and then they come back with a discrimination case against you. If they insist on applying and your requirements are in writing, when it comes back bad, you can specifically state why they were denied.

I have a one page scoring sheet.  The top half is scored before I do anything more than look at the completed application.  If they do not score enough points (or just blatantly miss a stated criteria, like no prior evictions) in that initial subtotal I do not move forward.

Use objective criteria, like how long they have held their job, % of rent to income, how long they have lived at past addresses, how long they intend to stay, stated criminal history, whether they provided bank accounts, etc to put a score to your hunches.

You can also drag your feet on denying, I normally wait until I have an applicant who has accepted to deny the rest of the applicants.  Put more effort into your most promising applications.  But you need to be able to measure why they are more promising.

I'm also a proponent of not charging screening fees.  It is less than a few hundred dollars per vacancy, and I feel like I have a lot more control over my process and I can have "squishier" stated criteria.  When you charge application fees most states require that you be pretty specific on your criteria so applicants don't waste money where they can't qualify.

Many renters have bad credit history or no credit history at all. Does that make them a poor choice as tenants? Not necessarily. It all depends on the circumstances that led to their "bad" credit and what they have done to improve their situation. Also, if they are able to pay their rent on time and fulfill the terms of your rental agreement, then you will have what you need. If you take on extra risk, then ask for a larger security deposit.

The first thing you need to do is establish your rental criteria. Depending on the type of property and the pool of applicants, it may be worth your while to review each application and interview the applicants for more information. Based on that information, it might appear they won't meet your minimum criteria to rent. Let them know, "It appears you aren't going to qualify to rent this place based on the information you already shared and our rental criteria. Would you like me to proceed with processing your application?" 

It also helps to share your rental criteria with applicants, as they are likely to self eliminate themselves and not apply in the first place. Don't worry about those who may try to fabricate their application to meet your criteria, rarely does this happen if the tenants know you really will verify all the information and do thorough back ground checks.

For me, there are other aspects that carry greater weight than a person's credit score or credit history.  

See this excerpt from our rental criteria:

FINANCIAL/CREDIT HISTORY

1.No outstanding debt to previous rental property owners.

2.No outstanding debt to utility companies.

3.No outstanding debt in excess of $1000 that is not in a payment plan.

4.No excessive monthly financial obligations - more than 20% of income.

5.Lack of credit history or marginal credit history may result in additional security deposit.

6.Derogatory credit (past due accounts, collections, charge off accounts, tax liens, judgements in excess of $1000 and/or bankruptcy) may result in additional security deposit or denial.

@Erin Hauser The way i look at that is pretty simple.. bad credit means they are bad at paying... so why would they be good at paying you? Protect yourself