Applicant A vs. Applicant B

[Jennifer Wilson]

Hello everyone!

My husband and I are looking to rent our house and will be managing it on our own. We have multiple rentals, but have always had a management company, so I am somewhat familiar with the process, but also still learning!   We currently have two applicants on the house, both of which have positives and negatives on their credit reports, so I am hoping I can get some input from more experienced property managers/landlords.

Tenant applicant A (husband and wife):

- Both credit scores meet our minimum requirements

- Income meets our minimum requirements and then some

- Only a couple debt items (auto payment, credit cards, etc). Per the credit report, each have used up less than 50% of their credit.

- One of the applicants has had multiple debts sent to collections.  All were under $1000 each, but the majority have been within the last year.  I still have yet to get a hold of his previous property managers to inquire about rent payment history.

Tenant applicant B (husband and wife):

- Both credit scores are slightly under our requirements

- Income greatly exceeds our requirements (18x the amount!)

- Per their credit report, both have used up 90+% of their credit.  It does appear that some of that is due to other mortgages (which we can all understand!), but there is also tens of thousands of dollars in credit card bills.

- Neither of them have had any delinquencies on payments.

What I'm going back and forth on, is the delinquencies of tenant A vs. the amount of payments tenant B has to make each month.  Is how much each has used up of their credit a factor you generally look at?  I appreciate any and all input that can help us out!

Thank you!

Jen Wilson

[Marcia Maynard]

What is your rental criteria?

Credit History? Income History? Rental history? Legal history? Smoking? Pets?

Applicant A to me seems a more realistic scenario.  It's fair to ask them what happened that led to their accounts being sent to collection. Sometimes other people's stuff erroneously shows up on a credit report.  Verify it's all theirs.  Is there still a balance on the items sent to collections? If yes, are they in a payment plan? 

Applicant B.... something odd going on. Gut feeling.

For both applicants....

What's their debt to income ratio - no more than 20%?  Do they keep balances on their revolving accounts or do they pay off them off each month? [If you were to take a snapshot of my credit report and my husband's you might see thousands of dollars on our credit cards at any point in time because we autopay as much as we can with credit cards and most of our purchases are made by credit card. What may not be evident is that all of the balances are paid in full every month! No penalties and no interest. Both of our scores are above 800. The point is, there's a smart way to use credit and a foolish way to use credit. Dig deep.]

Which applicant is likely to take better care of your place? Which tenant is more likely to adhere to the terms of the rental agreement? Which tenant is more likely to stay long term? Which tenant is more likely to take care of the landscaping? Which tenant is more likely to communicate open and honestly with you? How did the two candidates compare when they viewed the property? Did they indicate that the house has features that would match their lifestyle? Would they settle in well with the neighborhood and be good neighbors?

Honestly, for me, credit history doesn't weigh as much as rental history, adherence to agreements and the ability and willingness to pay rent and utilities on time. We don't even worry about credit scores. Open and honest communication is paramount. So is taking care of the property. If you can, stop by their current residence and see what it looks like.

Trust, but verify and pay attention to your intuition! Good luck!