Should I accept a tenant that has no credit history?

Question

Hi Everyone!

I recently bought a duplex and have received an application & deposit to hold from a newly engaged couple moving to my area. Based on the results of a background check I found that neither potential tenant has a history of evictions and they both have verifiable and reliable income. One of them has decent credit and the other has no credit history at all (she is 22 and a new college graduate). Should I overlook the lack of credit history and rent to them anyway? Should I  require that she have a guarantor? Any input would be appreciated!

Thanks,

Dave

Cara Lonsdale · Answer

Isn't it a sad state of affairs when we look down on someone who lives as a cash and carry standard?  That is really too bad.  Unfortunately, our credit system works like this.  We have to PROVE that we can manage debt in order to be considered creditworthy.

Considering her age, and recent graduation from college, I find it rather IMPRESSIVE that she hasn't gone out and signed up for every credit card that students get offered like candy on college campuses these days.  From the moment my daughter turned 18, we have been FLOODED with pre-approval credit card offers addressed to her, and she tells us that they basically hand out credit cards at school.  YIKES.

This is a good opportunity for you to establish a policy in case it comes up in the future.

For us, we would rent to them.  630 is decent credit.  Income is good, and you said verified.  No debt?  Man, this would be a no brainer.

Jay Helms · Answer

@Dave Bopp - I'm with @Caleb Heimsoth. No criminal background, no evictions, verifiable income, both members of the couple will be on the lease...there is your "guarantor".

Scott Weaner · Answer

I would bet that many of us had no credit history at that age.

Linda S. · Answer

@Dave Bopp,

We recently rented to a young couple in a similar situation  (no rental history, no credit), and it was wonderful!    If anything, they were A+ because they wanted to build a strong relationship with us for future rental references, and may be a bit nervous since it was their first rental.   I say if everything else makes sense, yes!   We always focus on income/job stability, as that's what going to pay the rent!

Steve Vaughan · Answer

Personally I love it when they have a 0 credit score (as long as they have proper income and clean criminal). They have NO DEBT.

I'd much rather have a 0 credit history applicant than someone with a high score and a high car payment. They will make their car payment before rent. I've walked past new Mustangs in the driveway while posting rent default notices. Go live in the car I tell them.

Dave Bopp · Answer

Thank you all for the input! I was able to get in touch with their previous landlord and was told they were clean, polite, and paid on time. With that reassurance, the lack of credit history seems like much less of an issue. I appreciate the guidance everyone!

Peter MacKercher · Answer

@Dave Bopp No credit I think is a larger red flag if they also are marginally employed or in a non-traditional line of work. The kind of applicant I see this being a problem for is one that likely operates on a cash basis and doesn't have a bank account. If the tenant has a college degree, a salaried position and is relocating for work then you'll have the responsibility of training them a little, perhaps. But from what you're saying on paper they'll be a tenant most people would be happy to rent to (if they're still renting) in a few years with more credit history under their belt. Use some of your landlord sense here -- how they conducted themselves -- and make your call from that.

Rachel H. · Answer

@Dave Bopp Check the current and prior landlord. Both will say a lot about their paying history. If no current or prior landlord, I usually don't pursue it and keep collecting applications. Good luck!

Thomas S. · Answer

These two applicants have more red flags than just no credit score. Their life situation is high risk although there is likely a lot of information you have no included in your post.

630 is NOT by any stretch a good credit score.

With no additional information I would reject these applicants .

Should I accept a tenant that has no credit history?

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