Credit score red flags?

Question

I have a studio unit and one of my screening criteria is a 650+ credit score. i have an applicant who applied and has a 707 score, but the credit report is flagging a few things.

1. Not enough available credit on revolving accounts

2. Insufficient payment activity over the last year

3. Too many recently opened accounts

4. Recency of a balance overlimit on a bankcard account

I looked at the month to month detail and I don't see a specific month that the issues occured.  I understand what these mean, but how should I weigh these in my screening?  Are these red flags or nothing to worry about since her overall score is above my threshold?

Marcus Auerbach · Answer

Not without context. That looks like someone how pays often cash and is not deliberately managing their credit score. Most tenants don't. They look at FICO as something that is done to them, and not as a scorecard of their financial behavior. So in a way, you are looking at someone singing in the shower, not realizing you are listening - and judging.

You have to look at these items in the context of your personal interview and the paper application questions (if you have one) - that is providing the necessary context. For example, is this person working for an insurance company for 17 years? Or have they had 4 jobs in the last 24 months? Did they show up in a 6 year old Honda or a brand new Mercedes? Was the car clean or full of McDonalds wrappers. That's context.

Jim Johnson · Answer

I'd look at the full picture rather than the score or the credit factors in isolation. A 707 is solid, but those flags would prompt me to ask a few more questions before making a decision.

I usually look at income stability, payment history, prior landlord references, and debt obligations alongside the credit report. Sometimes those alerts have a reasonable explanation, and sometimes they point to a pattern that's worth paying attention to.

The biggest thing is applying the same screening criteria to every applicant. A consistent process tends to lead to better decisions than focusing too heavily on any single credit factor.

Mohammed Rahman · Answer

Hi Jaclyn,

I wouldn't automatically reject an applicant based on those remarks if they have a 707 credit score. Those are factors that influenced the score, but the score itself has already taken them into account.

What I'd want to understand is why those remarks exist. For example, were the recently opened accounts due to someone moving, furnishing a new apartment, or consolidating debt? Is the lack of payment activity simply because they don't use much credit? Context matters.

I'd be more concerned with things like prior evictions, collections from previous landlords or utilities, recent late payments, or a history of missing housing-related obligations. Those tend to be stronger indicators of rental risk than generic credit score reason codes.

If everything else checks out, including income, employment, rental history, and references, I wouldn't let those four items alone outweigh a solid 707 score. I'd use them as a prompt to ask a few follow-up questions rather than treating them as automatic red flags.

Hope that helps. Always happy to connect if you have any more questions!

Drew Sygit · Answer

Highly likely that they have NOT established a "deep" credit history.

Means that they don't have enough active tradelines that are 24+ months old.

Highly likely that they are young (but you can't discriminate for age) or exist mostly via cash instead of credit.

You may have to look more closely at rental & employment history.- Hopefully they don't live with parents.

Ryan Spath · Answer

What is the applicants monthly obligations on the open credit? And How much money do they make? Example, the monthly cc obligation is 2500 a month, they net 7k and your rent is 2500 a month. Once you factor in utilities, and living expenses can this person reasonably live on 2k a month in your area?

Richard F. · Answer

Based on the details flagged, it could be they ran into serious difficulty within the past 4 - 6 months, and their score is possibly dropping each month based on new reporting.

#1, what are the stated limits of each account, what is current balance? Multiple high balances (over 50% of current limit) is a potential serious issue, if they are "living" off of the credit.

#2 Insufficient activity early in the year further indicates possibility of a major change in their life.

#3 Ditto! Potentially trying to get more credit before score drops, max out, then file bankruptcy.

#4 Ditto again! Recent over limit, possibly using one card to pay off another.

Find out what their CURRENT Bank / investment account balances are with original statements and verification.

This is precisely one of the reasons I always advise not to use a credit or rentability score as a minimum criteria. High scores can hide exactly the situation I have laid out above. Low scores may be the result of issues out of a person's control, such as medical, or divorce, foreclosure, and other issues that in reality have no bearing on what they are capable of paying today. You need to always examine all of those details, and think about what they might be telling you. Then ask questions of the applicant to find out more...but accept only documents, not mere words!

Jaclyn King · Answer

Rent to income would be x3.09

Chris Seveney · Answer

707 is still a good score but it sounds like the recently maxed out some accounts. So that could cause some challenges on making payments. What is their income ratio?

Credit score red flags?

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