Applicant has good credit, but terrible payment history - deny?

3 Replies

Had our very first tenant apply--good credit, 7x the income, nice guy, but I want to deny him -- can I? 

He has a very poor history of on-time payments after seeing his credit report (like 60%)  -- but his score itself is still good. Given that we're in Chicago which is a hugely pro-tenant city, in the midst of COVID (where evictions are in a moratorium), and this is our first tenant, I want to say no. Poor payment history (within the last 24 months, is a screening requirement of ours). 

As long as I send the adverse action letter in written form and a formal denial letter, we're good to go, right? 

We're an owner occupied building, so Fair Housing doesn't apply, FYI. 

Also, this is our tenant applicant criteria which are listed at the end of our tenant screener, which this guy filled out and should have seen: 

Our tenant screening criteria is as follows:
- Income must be 2-3x monthly rent
- You must be able to pay first months rent + $400 move in fee + animal move in fee (if applicable)
- Positive, verifiable, rental history free of evictions, any late rent within the past 3 years, and able to provide a positive reference from current and/or past landlords.
- Positive history of on-time payments for past 2 years
- Willingness to live in an owner-occupied unit and obtain renter's insurance is a requirement.
- Ability to pay $29 for background check and credit check.
- Ability to pass a background check.
- Ability to pass a credit check with a credit score of 670 or higher.
- Willingness to comply to a non-smoking agreement within the unit.
- Animals must be current on vaccinations (with proof), dogs require a pet interview, animal rent of $25/month/pet and $150 one-time move-in fee for pets
- Positive, verifiable 2+ years of employment history.

Thanks for your insights!

I would say no. Your screening criteria states 'positive history of on-time payments for past 2 years' so it seems pretty clear he doesn't qualify. I know Chicago is very tenant friendly so I'd be careful about not judiciously following your own rules. For example, if you accept him despite his late payment history but attempt to deny someone else in the future for the same reason that could come back and bite you. It would be easy to show you aren't being consistent with your screening criteria. Besides, late payers are a PITA. With that much history of late payments, he doesn't take his financial obligations seriously. You'll find someone better.

@Esther Page

Based on your tenant screening criteria you shouldn't have any issues rejecting his application. You provided him with your tenant requirements, which he should have read. If he didn't read them that's his own fault and he wasted both of your time by applying anyway. Maybe he thought you would overlook his payment history if everything else looked good.

That's why whenever I get a potential renter applicant the first question I ask them is if they meet all the renter requirements. Even when I post the renter requirements for a rental a surprising amount of people STILL don't read them.

 Pre-screening goes a long way towards saving time & energy. 

Originally posted by @Esther Page :

Had our very first tenant apply--good credit, 7x the income, nice guy, but I want to deny him -- can I? 

He has a very poor history of on-time payments after seeing his credit report (like 60%)  -- but his score itself is still good. Given that we're in Chicago which is a hugely pro-tenant city, in the midst of COVID (where evictions are in a moratorium), and this is our first tenant, I want to say no. Poor payment history (within the last 24 months, is a screening requirement of ours). 

As long as I send the adverse action letter in written form and a formal denial letter, we're good to go, right? 

We're an owner occupied building, so Fair Housing doesn't apply, FYI. 

Also, this is our tenant applicant criteria which are listed at the end of our tenant screener, which this guy filled out and should have seen: 

Our tenant screening criteria is as follows:
- Income must be 2-3x monthly rent
- You must be able to pay first months rent + $400 move in fee + animal move in fee (if applicable)
- Positive, verifiable, rental history free of evictions, any late rent within the past 3 years, and able to provide a positive reference from current and/or past landlords.
- Positive history of on-time payments for past 2 years
- Willingness to live in an owner-occupied unit and obtain renter's insurance is a requirement.
- Ability to pay $29 for background check and credit check.
- Ability to pass a background check.
- Ability to pass a credit check with a credit score of 670 or higher.
- Willingness to comply to a non-smoking agreement within the unit.
- Animals must be current on vaccinations (with proof), dogs require a pet interview, animal rent of $25/month/pet and $150 one-time move-in fee for pets
- Positive, verifiable 2+ years of employment history.

Thanks for your insights!

Denying the potential applicant because he does not meet your documented and provided criteria for acceptance is a fair reason for denial. Believing that Fair Housing doesn't apply because you are an owner-occupied building & you will find yourself in court. Stick to you're written objective criteria and apply it to everyone equally.