2 Potential tenants. 1 with good credit the other with below 600

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2 Potential tenants. 1 with good credit the other with below 600

Tyler SpeelmanPro Member
Rental Property Investor · Maria Stein, OH · Member since 2018 · 75 posts · 48 votes

I have several scheduled viewings for a vacancy. 2 potential tenants, a couple that will be living together has submitted application without yet seeing the available unit. One of the potential tenants meets all qualification standards, the other does not due to credit score below 600.

Would you take the average of their credit scores? Also, would you try to show this couple the unit earlier than previously scheduled showing and get a lease agreement signed so I do not waste time showing available unit to others?

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Jonathan Taylor SmithBusiness Member
Rental Property Investor · Durham / Raleigh (Triangle), NC · Member since 2015 · 840 posts · 801 votes
7y

@Tyler Speelman - I do not rent to person's I've not yet met in person, and I handle that initial meeting at the showing. And even if the person was moving from out of state and could not come to a showing, I'd still need to facetime or skype a showing and thus virtual-meeting in advance.

As for credit score, I well know that this is not always an accurate indicator of a potential good/bad tenant, as I myself once had a below 600 credit score when I was a tenant (caused by a number of factors none of which having any real relation to my credit or tenant worthiness) - as I've always been employed, never paid rent late once in my life and have always gotten 100% of my security deposits returned from numerous apartments before I became a landlord myself.

More than some arbitrary score, I care far more about how long the person has been on their job as long employment history shows some ability to follow rules and live up to expectations. How long did they live in their prior home? And I care WHY the score is low, such as did the person allow a $50 phone or cable bill destroy their credit, or is it larger medical and student loans? I won't fault a person for trying to educate themselves or stay alive, but I will for having a phone or cable TV they didn't need anyway and saying "screw it" and letting it kill their score - as they will do the same with me. So if they have one or more small collections, I may not rent to them if their score is 700.

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  • Jonathan Taylor SmithBusiness Member
    Rental Property Investor · Durham / Raleigh (Triangle), NC · Member since 2015 · 840 posts · 801 votes
    7y

    @Tyler Speelman - I do not rent to person's I've not yet met in person, and I handle that initial meeting at the showing. And even if the person was moving from out of state and could not come to a showing, I'd still need to facetime or skype a showing and thus virtual-meeting in advance.

    As for credit score, I well know that this is not always an accurate indicator of a potential good/bad tenant, as I myself once had a below 600 credit score when I was a tenant (caused by a number of factors none of which having any real relation to my credit or tenant worthiness) - as I've always been employed, never paid rent late once in my life and have always gotten 100% of my security deposits returned from numerous apartments before I became a landlord myself.

    More than some arbitrary score, I care far more about how long the person has been on their job as long employment history shows some ability to follow rules and live up to expectations. How long did they live in their prior home? And I care WHY the score is low, such as did the person allow a $50 phone or cable bill destroy their credit, or is it larger medical and student loans? I won't fault a person for trying to educate themselves or stay alive, but I will for having a phone or cable TV they didn't need anyway and saying "screw it" and letting it kill their score - as they will do the same with me. So if they have one or more small collections, I may not rent to them if their score is 700.

    Blue Chariot Realty & Management4.915 Reviews
    WebsiteView Page
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  • Patricia Steiner
    Real Estate Broker · Hyde Park Tampa, FL · Member since 2019 · 2k+ posts · 3k+ votes
    7y

    I would not average their credit scores...the one with the low score adds no strength to the lease and actually indicates that he/she doesn't live up to financial commitments. (One quick question: is the credit score due to lack of credit or poor payment history?) The time you put in up front in qualifying prospective tenants is critical to your ROI. I would schedule the couple to view the property at a date/time when you'll be showing it to other prospect(s) and go from there. My recommendation: don't settle, don't average, don't "make it work."

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  • Tyler SpeelmanPro Member
    OP
    Rental Property Investor · Maria Stein, OH · Member since 2018 · 75 posts · 48 votes
    7y

    @Jonathan Taylor Smith

    Thank-you for your response. Great points.

    @Patricia Steiner

    Thank-you for your response. Poor credit due to poor payment history. Great advice on being firm and sticking to standards. 

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  • Marcia Maynard
    Investor · Vancouver, WA · Member since 2013 · 3k+ posts · 4k+ votes
    7y

    Credit scores are not as important to us as rental history and a sufficient and reliable source of income.  There are many reasons a persons credit score could be low and not always indicative of a person's ability to be a good tenant.  When they sign the rental agreement as "jointly and severally liable" the person with the best score will mostly likely make sure the rent and utilities get paid.

    I would show the unit to all of those you have scheduled. The more the better. You will benefit from a big pool of candidates. Interview the potential renters prior to the viewing to make sure they at least meet your minimum criteria to rent. Meet them at the viewing and answer questions they might have about the property. Observe their behavior and what they say. Take note on how they present themselves and what their car looks like (clean & tidy or trashed?).  Let all of those who are interested apply. Then review the applications and rank them, with the most promising first. Process one application at a time and offer to rent to the household who first qualifies. Return the application fee to those whose applications you did not fully process. 

    When establishing minimum criteria to rent consider Residence/Housing History, Income/Employment History, Financial/Credit History, Legal/Criminal History. Let applicants know your rental criteria in advance so they can choose not to apply if they know they won't qualify. This will save you both time and money.

    Here's our criteria regarding Financial/Credit History. Note there's no mention of a numerical score.

    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.

    Note: Sometimes the credit report is inaccurate. Double check. If the tenant has small unattended debt, we nudge them to pay that off now or we raise our security deposit by at least that amount or even double. :-)  Most will do the right thing and pay off their debt. It's a life lesson that will help them in the long run.

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  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    7y

    I run the background check on the one with the best credit.

    I do not rent to someone that has not seen the house yet. That is how scams start.

    2Reply
  • Kat Rathell
    Rental Property Investor · Milwaukee, WI · Member since 2019 · 88 posts · 49 votes
    7y

    @Tyler Speelman, I agree with then other replies that meeting them in person is essential. I know it would be nice to just skip the rest of the showings, rent sight unseen and be done with it, but it may mean issues down the road.

    And yes, by all means, show to more people! It is a time investment, but by showing the property to more people you may run into candidates who qualify without caveats, who you would have met, and be out of the predicament you’re in.

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