What credit score do you use as a qualification?

Question

We own in a triplex where the rent is $500-600/mo. Should we stick the standard in The Book on Managing Rental Properties? What credit score do you use as the qualification threshold?

Nathan Gesner · Answer

I'm not concerned with the score as much as I am with their recent history. I see a lot of low-income renters applying for apartments in that price range and they often have bad scores due to medical bills, loss of employment, and other drama that takes place when someone lives paycheck-to-paycheck.

More important to me is how well they paid their last Landlord, their car debt, or their utilities.

Don't forget: if you reject someone or change the rental requirements (e.g. increased deposit) because of a credit score, you have to provide them with an Adverse Action Letter.

Jim Adrian · Answer

I list a 600 score requirement but I am flexible on this number.  I really look at the patterns and outstanding debt on the credit report.  If you set this number too high these same people would be buying and not renting.  Last 2 renters were over 550 and only 3 late payments in 3 years.

Tom Parris · Answer

Hi @Alyssa Paros,

Our standard requirements for properties are minimum 600+ credit score. Sounds like you're at the bottom of the totem pole for tenant quality. So accept less, but with 3 months security deposit?

I see credit as something someone can lose. If they have no credit to begin with, they have nothing to lose if they skip out on rent. However, losing a high security deposit is something they will want to hang onto.

Jenifer Kynor · Answer

I would personally always asking for at least 550-600 as the bare minimum. Regardless of the rent amount, you want to be confident that your renter has good payment history.

The company I work for always recommends 550 an approval, anything lower you could approve potentially but with conditions such as a cosigner. Hope this helps!

What credit score do you use as a qualification?

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