Can you deny a prospective tenant who has collections?

Question

I have a couple applicants who have collections on their report. Would this be means of denying their application?

Daniel A. · Answer

Hello TJ,

Denying an applicant is solely up to you, the landlord. Granted you must be Fair Housing compliant, but adverse records on a credit report is grounds for denial. It is generally wise to let the tenants know beforehand (before they submit the application, I mean) of your qualifying criteria so they are not caught off guard if they know of something on their report.

If you deny an applicant based upon what you see in their credit report, be advised that you are required by law to tell them that you denied them based on something you found in their credit report, and you are required by law to provide them with information regarding how to obtain the report. Generally, this would be a document sending them to the credit screening company who will then mail them a copy of the report.

As to what the adverse actions are on their reports, I would almost say treat it on a case-by-case basis. If the applicants are otherwise within your criteria, inquire into why a certain adverse action is on their credit. They might have a valid reason out of their control.

But if it's previous landlords who have filed against them, if it's previous utility companies who have filed against them, and if it's failure to make car payments, those are generally red flag adverse actions. Steer clear of those tenants.

Kim Meredith Hampton · Answer

I agree with Daniel, as long as you have your rental selection criteria posted, you can deny based on the collections. You can not deny based on anything in fair housing.

I once taught a class on rental criteria, and One example I use is this, may sound crazy, but gets the point across; if I wanted to say, everybody that rents here must have a red BMW, I could do that, as it does not address anything with fair housing. To help yourself, I would put together a list of your rental selection criteria that you give to each applicant with the application

TJ Daniel · Answer

@Daniel A. Thank you! Two of them have student loan collections and credit score reflects that. Thank you for your response.