Need help assessing FICO score and new tenant

5 Replies

I've taken over managing my C-class duplex for the first time after the last tenant trashed the place, was evicted, and my property management company seemed to be trying to do the least work for as much as I'd keep paying them. So I've fixed it up, put a bunch more money into it, and am finally screening tenants. I have requirements of 650+ credit score, income =3.5X rent, no smokers, and while I've gotten tons of interest, I haven't found the perfect tenant yet. But I'm kind of on the fence about one--she's young, and just barely missed the 3.5X rent requirement, but would meet it with her brother's income, who would be moving in with her. Her FICO score is 718, which is great, but she has no prior rental history. So I'm trying to figure out what the FICO score really takes into account. Would it be a lot easier to get a good score if you just have a couple of utilities in your name and aren't really living on your own yet?

I've just reduced the rent I'm asking hoping maybe it will draw the better quality tenants, but so far I don't see any difference. 

@Eric Littlepage first of all, a 650 credit score in a C class area is stellar. I think you are being TOO stringent if that is possible. Also, 3.5X the rent is very, very stringent. I regularly place folks that have a minimum of 600 credit scores and 3x the rent in Berwyn, IL which is a solid B class area. I have very, very few payment issues. 

Your tenant is an ideal tenant if she has a 718. Think of it this way, she can EASILY qualify for a mortgage. You should take her as long as everything else checks out.

Good job on actually screening your tenants though. I think you are on the right track. Sounds like you are in a solid area if you can find tenants with those kinds of qualifications. 

Originally posted by @Eric Littlepage :

I've taken over managing my C-class duplex for the first time after the last tenant trashed the place, was evicted, and my property management company seemed to be trying to do the least work for as much as I'd keep paying them.  So I've fixed it up, put a bunch more money into it, and am finally screening tenants.  I have requirements of 650+ credit score, income =3.5X rent, no smokers, and while I've gotten tons of interest, I haven't found the perfect tenant yet.  But I'm kind of on the fence about one--she's young, and just barely missed the 3.5X rent requirement, but would meet it with her brother's income, who would be moving in with her.  Her FICO score is 718, which is great, but she has no prior rental history.  So I'm trying to figure out what the FICO score really takes into account.  Would it be a lot easier to get a good score if you just have a couple of utilities in your name and aren't really living on your own yet? 

I've just reduced the rent I'm asking hoping maybe it will draw the better quality tenants, but so far I don't see any difference. 

650 score and 3.5x rent multiplier is NOT a traditional class C tenant. You want to limit your risk after having suffered through an eviction, but evictions are par for the course for C/D properties, and is why on paper those classes deliver great returns. High risk, high reward, until you get screwed and it averages off into a normal return over the years.

Make sure you are in-line with the market, look at what other rentals in your area and price range require of applicants. For the C- properties I manage, I don't put much weight into credit scores, I care more about content. If they have a pile of medical bill collections but no assets, who cares if the tenant doesn't pay them, the debtor won't be able to touch them. I'd rather get the rent paid as top priority vs. a low $ credit card or medical bill. What I do take issue with is utility collections, because that's directly related to the household (again, that reflects on their priorities), and absolutely no previous evictions.

Thanks for the responses.  Since this is the first time I'm actually managing my property I'm being very cautious with the screening, but I don't want to let the perfect be the enemy of the pretty darn good.  It's probably not a full C area, it's kinda on the border.  But I've been trying to upgrade this old place and make it more of a B class while I can't afford to gut rehab the entire thing.  Anyway, I agree that there's other things to consider if someone has a low FICO score, but i was wondering if the reverse is also true, and it might be easy to have a high FICO score by paying bills on time but that it doesn't necessarily show that they're able to weather life's inevitable roadblocks.

@Brandon Wells Can you tell me more?  As long as I'm not rejecting based on protected classes and I keep the same standard for everyone, how could I be discriminating?  I do see other landlords saying that part of their screening involves judging character, the tenants' cleanliness of their current house/car, or just going with a "gut feeling", and all that seems rather subjective but that is what you have to do, right?  I will say that almost everyone who contacts me through FB marketplace has a public FB profile, which is often VERY eye opening.  So since I've been contacted by TONS of people, I don't respond to every single one, but I figure that as long as I keep my objective standards high (FICO, income etc) then I am not illegally discriminating against anyone.

@Eric Littlepage all I am saying is be careful.  You may not be rejecting them because they are a "protected class" but your criteria could overly affect or limit a protected class. 

I will find the details and attach later, but there are HUD groups out west right now that are trying to make it where you can't deny someone based off of their criminal background because it vastly affects a protected class more, same with source of income. These laws are ever changing and landlords and property management companies have to ask themselves, who the policy is affecting and is it going to affect one group more than another.


I believe in mitigating risk for myself as an investor, property manager and that of all my clients.

I would be more than happy to provide an example of rental criteria that I utilize, but as a disclaimer I don't claim it to be full proof and always recommend you have an attorney review these types of things.