Would you rent to this tenant?

[Mike D.]

Hi all. So, I'm into all the details of acquiring and renovating properties and normally leave all the tenant screening management stuff to a management company. Currently my management company is asking if I want to rent to someone whose credit score is in the low 500s, which doesn't meet their criteria, but they otherwise look fine and have a guarantor with an excellent credit score. Would you do it? Bending rules has turned out to be a bad idea in the past but this one sounds like it might be ok--advice appreciated.

[Scott Trench]

I'll take a different position. I still have yet to hear the story of a bad tenant with a great credit score. I hear plenty of stories about bad tenants with bad credit scores. To me, this credit score seems to be the single best determinant of the likelihood of a tenant to pay on time and treat the place right. 

ALL of my problems have come from tenants who did not flow through my screening process (credit score was poor or unknown because of my ineptitude or failing to screen or because I inherited the tenants from a prior landlord). 

While all of the screening process is important, the credit score is the first and primary thing I look at, and seems anecdotally across hundreds of interactions I've had with landlords to be the single best determinant of whether the relationship will work out. 

One problem with this tenant is that their score is in the 500s, which means they are likely actively behind on many debts. Once one even just gets current, it is likely that their score will jump to the high 600s in a matter of 6-12 months. I've seen this happen because I work with folks in situations like this regularly on a volunteer basis and we hear about it all the time on the BP Money Podcast. 

My exception to the credit score rule would be if the tenant had NO score at all, which likely indicates they are an immigrant, just starting out in adult life, or a huge Dave Ramsey fan. In this case, I'd be fine with the guarantor/tenant relationship. But the poor credit score suggests current, active problems in paying bills that are due RIGHT NOW. That bodes ill for the landlord, in my opinion.