Here is the Best Indicator of Tenant Quality… Hands Down.


I know many landlords, and despite my success at screening and selecting tenants, they often think somehow their property is different from mine. They do not think they can use credit score as a reliable indicator. They are ignoring credit score to their own peril.

The fact is, credit score is the most reliable indicator of tenant success that there is, bar none. You need to make sure that the tenant can afford the unit with an income of 3.5x the rent, but credit score will weed out the people that have behavioral issues and have no problem cheating anyone that they owe money to.

If you are a landlord, you know you need to do a background check. A critical piece is getting a credit report, complete with a credit score. The credit score is a summation of everything that goes on a credit report. It is calculated the same every time, with no bias to any discriminatory practices. It is colorblind and not subject to any fair housing issues.

Use credit score, without fail, as a deciding factor to include or exclude candidates for your rental. You should still have criminal criteria and other factors, but use the credit score as a line in the sand. Some landlords like to create their own score, somehow, by looking at the details on the report. This is a system fraught with errors and can lead to a high-risk situation.

A solid credit score tells you the tenant stands behind their word and cares about their reputation. It will give you great insight into a tenant’s personal behavior. You need to make sure every adult passes your credit standards, not just the primary lease signer.

I primarily look at the credit score, not the individual details, as that is the summation of all of the details on the report. Make sure you know what score you are getting. I use a report that shows FICO score, which ranges from 300 to 850.

Related: The Landlord’s Guide to Effective (& Legal) Tenant Screening

I do look over the entire report to see any other potential issues that may be coming up. Of course, the report is only as accurate as the information provided.

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What is on a Credit Report?

There are many different agencies that create a report, and different companies use different formats. There is only one company that has a FICO score, and that is the Fair Isaac Company. Many companies, such as Equifax, TransUnion and Experian use this score, but not exclusively. Regardless of the format of the report, here are some things you can look for.

The basics are there. All accounts that are associated with the social security number are on the report. I am sure that at some point unused dormant credit drops from the report. They will show delinquencies and on-time accounts. Watch for recent accounts being delinquent, and watch for small balances showing up. If you bail on a cell phone contract, it shows up. If you do not pay the light bills, it shows up. People who cannot pay small bills are high-risk.

Past Addresses

You need to understand the past address section. People who have too many addresses in the past five years are high risk. If someone has three or more addresses in the past five years, you may want to avoid them. They move too often for you to make a profit. Why is it necessary to move every year or two? It may be legitimate, but it could also be a forced move situation. The credit score will shed light on the reasons, regardless of what the tenant says the reason is.

You should also check if the addresses on the credit report are the same addresses that are on the application. Did the applicant conveniently forget one (or more)?


When you owe a company money, it could be due to a dispute on the bill. It may make for a late payment mark on your report. It may go into collections, or the company may write off the amount owed. If the collection is a landlord or apartment complex, it is a huge red flag. Knowing the names of the complexes around your area will help you identify apartment collection entries on the credit report.

Are there a lot of medical collections? A medical issue is one of the few things that cannot be anticipated. Of course, having decent health insurance and an emergency fund helps you anticipate…

Virtually all collections are a result of the tenant saying to someone that they will pay, and the tenant did not. Cell phone collections are a huge red flag. It is generally a contract that was skipped.

Other Credit Inquiries

This section will tell you what companies have inquired to a person’s credit. If you see other apartment complexes recently checking, it is likely the applicants were declined by them. Or maybe the tenants changed their mind and went somewhere else. If you are still considering renting to these people, you have to re-check your analysis to see what the other company might have seen and you have not. Or ask the tenants.

Related: The Four Pillars Of Tenant Screening

If there are a lot of recent inquiries from car loan companies, cell phone companies, etc., your applicant may have some financial trouble or may be looking to pick up more debt. It could be a red flag.

Debt to Income Ratio

This will list the balances to the high credit ratio. How much more capacity does the applicant have if they need money? If there is not very much “room,” their next emergency could be yours.

I do not put a lot of faith in this number, as I have seen high balance cards that are not used or car loans paid off, and it appears to be a distorted number on some reports. You should use this number in combination with the other information on the report.

Number of Good vs. Bad Accounts

Most people should not have any bad accounts. The longer a person has credit, the more accounts they will generally have. If you only have 2 accounts, it’s easy to keep them paid and get a 700+ credit score.

When you have 30+ accounts over your life, and they are all in good standing, it is a much better indicator.

If they have more bad accounts than good, it is a big problem.

Credit History

This section lists all accounts, balances, and payments. I have seen cases where a payment amount is shown, and no balance.  That indicates a paid off account.

I look at this just to see how much the person is already paying each month. I also look for accounts with recent activity, not old accounts. The number of days delinquent for 30/60/90 days is shown, as is current status.

It lists student loans. Student loans that are in deferment are counted as a good account. Nothing is payable until school is over, so the account is in good standing. When an applicant avoids paying a student loan that is in the payment period, it is typically serious. This loan MUST be paid; it does not even go away in bankruptcy. Most of the time, student loan payments are relatively small. It is an accident waiting to happen to see student loans not being paid.

You can see if an applicant had a mortgage, a car loan, or even utility bills paid on time. Generally, a person who had a mortgage is a decent risk — or they were at one time, anyway.

There is a lot of detail on a credit report, and each background check company might provide a slightly different report. Be sure to understand what you are getting and how to read it.

Are there some problems with some credit reports? Sure there are. The majority of the credit reports are correct, and even if they should have issues, the issues are rarely significant. Use a credit report like a grade report that is sent home to your kids from their teachers. Did they pass or fail?

Do you look at credit score of ALL of your tenants?  Or the entire report?  Or just the primary lease signer?

Leave me a comment and let’s talk! 


About Author

Eric D.

Eric is a 55 year old, soon to be former, computer professional. He started several years ago to replace his “work income”, with other alternate streams. He is well on his way to retirement at age 56, and is currently making more money at extracurricular activities, than he is working at his full time job. Whether that is Financially Independent, or just old fashioned entrepreneurial spirit, is in the eyes of the beholder.


  1. karen rittenhouse

    Hi Eric:
    Great post. Love that you added so much “why” to use the credit report.

    We did not start out using credit reports, but our risks dropped dramatically when we began using them. To begin with, we charge an application fee and let prospects know that we will be checking their report and that the fee pays that expense. This alone eliminates a lot of potentially bad tenants.

    My favorite suggestion is that you check what the credit report says against what they put on their application. We have definitely found discrepancies and I’m always fascinated by this. Why would they give me past employers or addresses that are not true when they know we’re checking? I suppose because they’ve run into landlords who say they’re checking but don’t.

    Like you, I highly recommend using credit reports on all prospects. Take that little bit of time to get to know someone you’re handing over a very expensive property to. Trust, but verify!

    • Eric D.

      Thank you for the comment

      If you cannot find good renters, it is generally a sign you are over-priced, or under marketing.

      Where you live, or what you make, is not factored in on a credit report or score. If all you can find are bad credit tenants, you need to adjust your prices higher for risk. And get higher deposits, and get going on evictions as soon as legally possible.

      The other option is to take programs like Section 8, or skip as much maintenance as you can legally skip.

      If you cannot do any of the above, it was probably a bad investment decision.

    • Richard,

      I have a 4-plex in Denver. I use Trans-Union’s Smart Move.

      There’s no charge to you. Prospective tenants pay Smart Move directly and you get a credit report and criminal check along with a recommendation to rent or not. It costs the prospects $25 or $35 depending on the report you require. There’s almost no admin for you to do. Because the prospects request their own credit report, it doesn’t count as a hard check; so credit savvy prospects like it too.

      • Eric D.

        Make sure they give you county level criminal reports, that show parking tickets too. You want everything.

        My reports run ~$39 for one state, and it included employer checks and past landlord checks. Well worth $39. If the applicant lived in more states during the past 7 years, I get criminal reports for all those states too.

    • Eric D.

      Thank you for the comment!

      Never go below 3.5x the rent, unless you are looking for trouble. Perhaps a very high scoring tenant will be OK with a bit weaker income. You want a tenant that has enough money to pay the rent, and be able to react to an emergency financial situation.

  2. Sorry cant get behind this one. College Students move frequently, people starting in entry level jobs, people with roommates, etc people move around. If you want a long term tenant aim for a neighborhood with great schools. Apartments are temporary, better deals come along you move. Duplexes and houses are two to three year choices unless in a college town. I have moved each year for 5 years from starting in North Carolina to Texas, from a cheap apartment complex to a better one each time. I think the tax return and steady employment are great indicators. Its your property but i have a 19 year old cousin with a 700+ credit score all he has a car and lowes home improvement card, sorry not trusting him with a home purchase or $25000 credit card. Come up with something far and reasonable. Here in Austin texas apartments are having to drop prices because the restrictions are so high people are gettting better deals with renting a house or moving further and further out. Now after being here 3 years its starting to be cheaper to get into the city center.

    • Eric D.

      Thank you for the comment!

      People do move, but an apartment with a higher score tenant will be easier to re-rent. The place will likely be cleaner, they will even help you rent. Many of my tenants hire professional cleaners and get the carpets professional cleaned.

      it is not unusual to get a 1-day turn with a solid tenant in place.

  3. Gary Alford


    Pretty good article but I would have to agree with Ericka on this one. The credit score system in this country is faulty at best. Plus people do move for many different reasons. I have chosen to move because of rent increases, neighborhoods changes, job changes and others. Maybe it is a good idea to ask for reasons on the application if that is legal.

    My entire time while I was in the Navy was about trying to build perfect credit. I had a car loan and three other loans over a 4 year span and never missed a payment. Also paid all of my other bills on time. Went to check my score when I was about to get out and I had a 5 something. How? So I believe the report itself is far more important than the score.

    • Eric D.

      Thank you for the comment!

      There are problems with the credit reports for sure, but the reports do not significantly change with or without the errors.

      Do you think you can look at the report and come up with a better scoring system than the companies that have some of the best minds and have been doing this for many years, probably longer than you have been alive?

      There are legitimate reasons to move, but most people that move often you want to avoid. Especially if they conveniently ‘forget’ to add the recent addresses on the application.

    • Eric D.

      Thank you for the comment!

      I use a company called MCC group. All applicants fill out an application, and on the application there is a place to sign that gives permission for a credit check.

      Criminal reports are public, as is any information in the public domain, such as Facebook, whitepages, etc.

  4. Mindy Jensen

    I ALWAYS learn something from your posts! While I knew you had to check a credit report, and have even checked my own a couple of times, I didn’t know what any of that stuff meant. Thank you for explaining the different sections.
    Regarding the comment above about credit reports being faulty at best, you are allowed one free credit report every year. Get the report and check it out. Go through each and every item and make sure it is correct. Did you miss a payment that you didn’t realize? Have you been a victim of identity theft?
    If you do move frequently, for a reason such as military or job changes, put that into the rental application. It may swing the vote to your favor, especially if the landlord was on the fence.

    • Eric D.

      Thank you for the comment!

      Great point Mindy! I saw a study once of credit report errors. Most of the errors were insignificant. About half of the errors actually helped the applicant. Only ~2% of errors were really something to worry about.

      And all credit reports can be checked, and corrected. You are actually allowed three reports every year, one from each TransUnion, Experion and Equifax. If you get one report every 4 months, from one of the above, you can keep close tabs on your credit.

  5. Chris Gilbert

    Thank you for the great article. We have generally noted the credit score, but not used it to the extent you suggest. We will from now on though.

    One area where the credit score potentially eliminates good tenants is for people who have had a short sale or foreclosure. Previous home owners who were generally a good credit risk, but were unable to make their mortgage payments, will have a terrible credit score. However, they can make good tenants.

    You noted that

    “The fact is, credit score is the most reliable indicator of tenant success that there is, bar none.”

    Do you have references that support this claim, or is it primarily based on your experience? I’m not disagreeing with you since your logic seems sound, but I would be interested in seeing some numbers.

    • Eric D.

      Thank you for the comment!

      You can do a search on things like “Credit score” and “risky behaviors”, or “Insurance claims”, etc. The fact is, risky behaviors lead to unplanned expenses, and undesirable behaviors. Insurance companies have figured out that people with low credit score have more insurance claims. What will you do if your insurance premiums get raised due to tenant behaviors?

      I see a LOT of background checks every year. When I see low credit scores, I see many more criminal convictions. People hang around with people like themselves, so their friends are not much different, generally. Whether it be in terms of criminal record or credit score, or earnings.

      A higher credit score will have less payment risks. That alone makes it a solid indicator. Income will tell you the tenants ability to pay rent, credit score will tell you the tenant desire to pay rent.

  6. Another great post. I appreciate all the detail. I agree that credit reports are a non-biased way to see if people are likely to hold up their end of the deal. One think I’ve learned over the years, not necessarily from tenants, but mostly from employees, is that people will lie and try to gloss over any part of their history that might be a red flag. Even calling for references is not always fool proof. It’s good to have the solid report to fall back on.

  7. I somewhat disagree with the sub-600 limit. Part of the world of renting is providing options for people who are unable to buy. Part of this is credit. I worked in finance before I starting managing properties and if there is one thing I know is that rent and lights come first. Also, a single mother will choose to pay rent and buy food for her kids over paying a credit card anytime. It is not easy and it ruins your credit, but good people struggle also. If the income is high and the credit is still bad then by all means it is a no.

    • Bill Crow

      Good point. This is where Eric’s direction on looking at the income ratio is really important. That will help you understand WHY they are sub-600. What you would look at in this type situation starts with: (1) Can they afford the proposed rent? (is their rent/income ratio under 3.5x); (2) How have they paid their bills with their current level of income and rent? What I mean by that is, for example: If someone has been at their same job making $25,000 a year for four years, but they have stiffed a number of creditors during that same time period, (especially if it includes a prior landlord), then the likelihood of them paying you and taking care of your property is much, much worse than if their recent credit is good and reflects sufficiency to cover their existing debt.

      A credit score is, to some extent, “just a number”. It is a highly valid, well-tested statistical representation, but it isn’t perfect. What’s behind the number is what matters. An example to your point, a sub-600 that is low because of a bunch of medical bills resulting from a car wreck 5 years ago, but who has paid his/her contractual obligations in a regular and timely manner might be worth a deeper look than someone who just flat out doesn’t pay or is over their head in debt.

      Any tool will help you once you learn how to use it and use it properly. Thanks, Eric for the great post.

    • Eric D.

      Thank you for the comment!

      To both of your points, anyone can rent to anyone they want to. I choose low risk tenants. I want tenants that are on their way up, not permanently in the doldrums. I do not feel it is an obligation on my part to provide housing for deadbeats, or low score tenants. Ever.

      If you think “a single mother will choose to pay rent and buy food for her kids over paying a credit card anytime”, and that same mother will pay rent over giving her kids toys, buying alcohol, drugs and cigarettes, new TVs, etc. good luck.

      A parent who cannot afford the kids did not think ahead when they had them, they will not think ahead when rent is due. You can take that to the bank.

      Credit score can predict personal behaviors. Want a tenant that leaves if they cannot pay rent, go with a higher score tenant. Want a tenant that fights you over their ‘entitlement’, find a low score tenant.

      People with low credit scores generally do not pay their bills. They ‘took’ something from someone and felt like it was theirs. They did not feel the need to pay.

      Good luck with a tenant with that attitude.

  8. This is BS. Some people prioritize paying their rent above all else. And to put your student loans in deferment you must be in constant contact with Fedloan. Deferment doesn’t say, “no, I’m not paying it” it just says, “I’m aware I need to be paying this at some point.” Obviously, you would not accept as tenants those who have recently graduated college and may not be able to afford student loans along with rent, having a reliable vehicle to drive to work, etc”. Fine, but stop stereotyping. It is also disgusting that you paint single mothers with not the best credit as people who are totally irresponsible. Maybe their spouse abandoned them, maybe they lost their job in the recession, perhaps they are widows…. Articles like yours are a prime example of income inequality at its finest. This is just so totally disgusting. The issues you cite are vastly more complex than your justifications of those issues.

    • I treat all renters the same, that is why I use credit score. It doesn’t take into account race, sex, income or any of the other protected classes. It is truly a blind indicator.

      Want a better credit score?, pay your bills. It really is that simple.

  9. Russell Brazil

    I like to let the information in the credit report tell me a story. I can think of plenty of instances where a bad credit score was not reflective of a good tenant and vice versa. Someone may have a really low credit score, being dragged down by a foreclosure and bankruptcy that happend in 2009 when the world was collapsing. But they may have no late payments in 3 or 4 years. We need to interpret the data in the report and not just rely on the number that is spit out.

  10. Sparrow St. Claire on

    Ugh. I agree with Anna. The fact that you wrote “A parent who cannot afford the kids did not think ahead when they had them, they will not think ahead when rent is due. You can take that to the bank” is, to be frank, truly judgmental and vile. I was interested in the article and thought it made some decent points but disparaging single mothers and automatically associating them with “alcohol, drugs and cigarettes” is simply wrong. What started as an informative article became something that boxed all those who might have gone through a tough time in to the category of “bad people”. And now this article just reeks of white male privilege.
    I know some single mothers who were abandoned with their child or children and each worked hard to keep a roof over their children’s heads as well as feeding and clothing them. None of them lay around in dirty homes letting their rent cheques bounce. If that’s how you truly see the world then I feel badly for you.

    • It is not white male privilege, which in and of itself is a racist comment. It is reducing the risks of being a landlord, which credit score is a big indicator.

      Why else would a bank use it as an indicator to the ability to pay back a mortgage? Why would insurance companies use it to judge risky behaviors?

      You need to start using your common sense on this one.

  11. After reading your article I am throughly disgusted how it is implied that a credit score is an indicator of a persons good versus bad tenant. My partner and I both lost our jobs within two months of each other. We had emergency funds but did not anticipate how long it would take us both to find employment. Long story short we had to keep a roof over our heads and food on the table so credit card payments suffered drastically bring down our credit score. We had to more to a smaller rental but had issues because of the aforementioned circumstances and people treating us like dirt.

      • Listen, I have worked my entire adult life in the finance business. Some people default on their debt out of cheating, but others simply do not have the ability to repay. This is why banks have loan loss reserves. He does not have that ability at this time, and he needs a place to live. Even if he does land a job, it will not immediately change his credit report. As for your assumptions, he does have a phone, but I pay for it and all of his other expenses. He does not have a car and does not drive. He’s MY SON for crying out loud and I will not put him on the street. He is not the renter, I AM, I qualify and he is going to be my roommate. There are other circumstances that I will not get into and are none of your business. So in summary, I greatly resent your judgemental pomposity for characterizing my son as irresponsible, and I am sorry to have commented. You do not know what you are talking about.

  12. I feel the need to defend Eric’s comment about the single mother bad tenant example. I grew up with a widowed single mother who sacrificed a lot to make sure the bills were paid on time so I sympathize with struggling moms. But, we own a multi-family property in a low-income neighborhood and tenants abuse. We have had so many single mothers give us sob stories of why they can’t pay their rent, then they go out and buy a new car, have new furniture delivered, and we see tons of packages from online shopping. They try to live a great lifestyle by not paying rent and manipulate the system. We had so many bad tenants, it got to the point where we were under foreclosure. We were able to get out of foreclosure by borrowing money from family but had to change the way we choose tenants. People will not always pay lights, rent and food first. Everyone wants to look and live good, and since rent is the biggest expense and it takes months to evict. That is the easiest way to save some money so they can buy unnecessary things. Not all single mothers are that way, but there are a lot of bad apples out there and as a landlord, you need to protect yourself first because no one cares if a landlord ends up in foreclosure.

  13. I must take strong issue with your assertion that a credit score is always a strong measure of character. I’m having my son move in with me because his mother has to move and does not have room for him, but his application with my landlord may be rejected on the basis of his credit score. My son has not been able to find work since graduating from college. The only item on his credit report is student loans with several past dues due to his delays in seeking payment deferral. On the other hand, I have a good credit score and my income is well over 8 times my rent. In my book, rejection of my son’s application would amount to illegal discrimination. Other than living with me, he has no option but the street.

    • Unfortunately, since your son is an adult, it is not illegal to treat him like any other adult that may be a renter.

      he agreed to pay his Student loans. he is skipping on them, therefore he is cheating the lenders. I suspect that he has a cell phone, and plenty of money for a car, but not his loans.

      He could have mowed lawns, picked up a job pumping gas, or even bagging groceries, but he decided to just skip his responsibilities. I do not need anyone like that living in my rentals.

      He has other options. He could even join the military, like I did.

  14. William Nunez on

    Hi Eric,

    Can my rental application be denied without pulling my credit score, even though I met all the requirements and I was the first to turn in my application? The rental company claims they chose the “best qualified” out of multiple applications and the other party had a “superior” application than me. The lady handling this claims I was second to turn in my application, although the front office said I was first. Regardless of who is first, can they choose the “best qualified” without pulling my credit score? Their application says, ” In the event of multiple applications, the property will be rented to the applicant with the best overall income, credit, and rental history.”

    Thank you,

    William Nunez

    • IN Minnesota, that would be illegal. Either way they should have taken the applications in order. screen them according to their criteria, and accepted the first qualified tenant.

      If they took an application fee from you, I would request a refund if you indeed met the criteria.

  15. Thanks for all the great info! I like the two points you made about low credit score applicants: “I do not feel it is an obligation on my part to provide housing for deadbeats, or low score tenants.” And in another article, “Not everyone with a low score is bad. I have had some great tenants with a low score too. But why make life more difficult? I do not have time for sob stories. I am not running a shelter.” I currently have 3 properties, managed by property manager. I have one unit that has been vacant for almost 2 months and they are trying to push a 544 credit score applicant on me with judgments, etc. They say the guy can provide good rental references/verification, but they can get that from anywhere. I just don’t feel comfortable renting to this applicant. I guess it’s better to wait and avoid the headache.

    • Thank you for reading!

      A low credit score is a very high risk tenant. Somewhere around the 625+ range is where they seem to become more civilized. Below that and it is a crap shoot.

      Make sure to know the average. The average renter credit score is ~658. Keep that in minds when choosing applicants.

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