Should I rent to this tenant?

Question

Hi! I'm new to this and am screening a tenant. Would really appreciate your thoughts on moving forward with this tenant. The rent is $2500/mo. No evictions or criminal reports. Their credit score is 568. Derogatory items are:

Negative Tradelines: 6

Tradelines with any historical negatives: 3

Occurrences of any historical negatives: 9

For the last 4 months, they have a recurring income of $3489, and non recurring income of $5578 for a total of $9067.

I asked for a co-signer and their report ran this way:

Credit score of 576. Derogatory items are:

Negative tradelines: 8

There are notes on some trades that have a remark of "Chap. 13 bankruptcy". I'm not sure what that means. Payment history looks good.

The last 3 months their average recurring income is $6486/mo and non recurring is $5488/mo for a total of $11,975

No evictions or criminal reports.

Would you rent to them?

Thomas Senatore · Answer

As a Broker in Florida and runninga property management company I agree with Glen.

You MUST have a policy in place and use it the same each and every time otherwise you could be considered discriminating.

I also have a zero tolerance policy to those who lie on the application.  If you put down any false information (evictions, felony, etc) and I find out, you will never rent from my brokerage.

We do have a tolerance if they disclose and it is within our conditions to accept.

Nathan Gesner · Answer

I would only rent to them if they could mitigate the risk posed by low credit scores and too many negative accounts. Either a really big deposit (two months of rent or more) or I would require them to pay 3-6 months in advance.

Alex U. · Answer

I would post in your listing min credit score as well as min income (i.e. 2.8x rent etc).  This would allow you to be clear and avoid any potential risk of housing discrimination. If you are not getting quality inquires, it may be worth lowering the rent a tiny bit $50/$100 to acquire higher quality potential tenants with better scores and income.

Angie Y. · Answer

This is all very helpful. Thank you all!

Michael, I'm not familiar with a Class C tenant, so any insight would be helpful. Appreciate it.

Michael Smythe · Answer

@Angie Yamaguchi this is a Class C tenant.

How familiar are you with the pros & cons of a Class C tenant?

You didn't mention anything about the Verification of Rent for their last 2 landlords?

We require a 2-year work history, supported by YTD paystub and last year's W-2(s).

You won't get stable rent payments, unless tenant has stable income, which they won't have unless they have stable employment.

Glen Wiley · Answer

I would but...

What are your criteria? You MUST have specific approval criteria in writing and apply it to every single applicant, you must also accept the first applicant that meets those criteria. If you don't do this then you are vulnerable to suit for violating equal housing law.

My criteria are:

1. Verified gross income 3x monthly rent.

2. No evictions or judgements in their record for unpaid rent.

3. Be honest and tell me what will appear on a credit check and background/criminal check. If I find things on there that they didn't tell about ahead of time then I won't rent to them.

I do not care about credit rating or even bankruptcy provided they have a history of paying rent (always check landlord references by looking u contact information independent of what they provide).

Should I rent to this tenant?

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