Tenant Credit Score Requirement

Flipper/Rehabber · Jeffersonville, IN · Member since 2015 · 44 posts · 17 votes

Hey All,

What's your thoughts on a minimum credit score for tenants?

The 3 bed 1 bath SFH we have available for rent has a credit score minimum of 600. So far from speaking 20+ applicants the credit score issue seems to be constant issue. Most make enough income but have a credit score around 550.

I'm interested to hear your opinion. Are my standards to high to be asking for 600 credit score?

Thanks, Ryan

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Gretchen P.

Rental Property Investor · Littleton, CO · Member since 2014 · 150 posts · 114 votes

I look at why the score is low. I have had applicants with no debt, and no history of debt with low scores, and had people making 3000 a month owing 35K in consumer with a 750. I will take the low score all day long in that situation. I also look at what caused the low score and what kind of debt, someone with a 25K car loan and 10K on a Nordstrom card is different than someone with 35K in student loans in my opinion. It shows how they handle their financial decisions. A few random late payments in the past are also different than if someone missed payments over the last few months. That's more forgetfulness than inability to pay, if they want to pay a late fee every month, that's fine with me, I can cover the mortgage. If applicants had an 780 credit score and a great income and tons of savings most of them would be looking to buy, not rent. I look at the whole picture, and if the score is in the 580-640 range I ask for an additional month deposit.

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Anthony Wick
Rental Property Investor · Ankeny, IA · Member since 2017 · 2k+ posts · 3k+ votes
7y
@Ryan Gettelfinger
I do 600 as well. But if you can’t get that, you could always go over their credit scores to see why they are only at 550. Medical payments? Credit cards? Divorce? Some will tell you never compromise. But it’s also a human business. Analyze and see the reasons why.
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Pete Reed
Rental Property Investor · Member since 2018 · 26 posts · 9 votes
7y
630 min... income should be 3 times the rent.... can yuo get more deposit/security? Also you could get a guarantor.... another option is 1st and security plus last months rent. Not month 2. Gives you more security. Shows they got cash if someone has bad credit do they have cash if they don’t have cash do they have credit? One or the other... it’s a tell tell if the6 have neither
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Ryan Gettelfinger
OP
Flipper/Rehabber · Jeffersonville, IN · Member since 2015 · 44 posts · 17 votes
7y
Interesting feedback, I have not considered negotiating additional terms due to low credit score but if I don’t get a qualified tenant soon I’m going to do that.
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Mark Fries
Contractor · Jacksonville, FL · Member since 2017 · 1k+ posts · 2k+ votes
7y
@Ryan Gettelfinger Under 550 do a double deposit or triple deposit.
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Nathan GesnerBusiness Member
Moderator
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
7y
If you advertise and nobody meets your qualification, that means you're in a lower-class neighborhood and will have to adjust your standards. As others have said, I charge a higher deposit for higher-risk tenants and that works very well.
I recommend a 600 minimum with one month rent as a deposit. Score of 550 - 599 will be a double deposit. Don't accept anyone under 550.
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Jim S.
Sterman, MI · Member since 2017 · 378 posts · 306 votes
7y
20 year olds will not have a 600 score so keep that in mind. 30 year olds are a different story.
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John T.
Rental Property Investor · Central U. S. A. · Member since 2013 · 296 posts · 149 votes
7y
@Jim S. I think you might be wrong on that. I had a 24 year old female applicant with bank account, debit card and one (1) VISA card. Her FICO was 798.
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Jim S.
Sterman, MI · Member since 2017 · 378 posts · 306 votes
7y
Wow. I stand corrected.
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Gretchen P.
Rental Property Investor · Littleton, CO · Member since 2014 · 150 posts · 114 votes
6y
I look at why the score is low. I have had applicants with no debt, and no history of debt with low scores, and had people making 3000 a month owing 35K in consumer with a 750. I will take the low score all day long in that situation. I also look at what caused the low score and what kind of debt, someone with a 25K car loan and 10K on a Nordstrom card is different than someone with 35K in student loans in my opinion. It shows how they handle their financial decisions. A few random late payments in the past are also different than if someone missed payments over the last few months. That's more forgetfulness than inability to pay, if they want to pay a late fee every month, that's fine with me, I can cover the mortgage. If applicants had an 780 credit score and a great income and tons of savings most of them would be looking to buy, not rent. I look at the whole picture, and if the score is in the 580-640 range I ask for an additional month deposit.
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Spencer GysiPro Member
Rental Property Investor · Pennsburg, PA · Member since 2019 · 19 posts · 2 votes
3y
@Gretchen P. I know this is an old post but wouldnt weeding through credit results and denying if you dont like what you see be considered discrimination for fair housing? How could this be done in a way to not go against fair housing laws?
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