Bad Credit - Good Tenant?

[Erin L.]

I could really use some cumulative life experience advice this evening! I just used the MySmartMove site for tenant screening and was greeted with a tenant score of "conditional" with a FICO of 468. I have had both great tenants and bad tenants that had bad credit, this just happens to be the first time I am doing things the "right way" rather than solely on my judgement and phone calls. Being that I have had great tenants who were in the bankruptcy camp, I am having a hard time knowing when to take a chance and when not to.

Pros: applicant has steady military income, 4x rent amount, has resided in 2 prior residences for 3 years at each in different states, prior landlords state no notices ever served, always paid on time, would rent to them again. another factor is that my current duplex tenant (great tenant) referred the applicants and they are very motivated to live next door to their friends and be in this school district for their child. Willing to pay rent via direct deposit, the accounts they do have open have high monthly payments but they are current.

Cons: Debt/Income looks to be at 39% without rent, so about 57% with rent, credit score of 468, several past accounts that were charged off with balances below 5K, appears they like to drive new cars and are willing to finance them through "finance companies" instead of traditional bank auto loans.

Trying to do my due diligence and the credit score makes me nervous, but at the same time it looks like they place priority on paying their rent and cars… no lateness in years on those, the late ones and chargeoffs look to be dept store/credit cards and things like that. I appreciate any advice or solutions that have worked for you!

Would a month-month lease provide incentive to pay on time? I've never done anything less than 12 months and I'm moving out of state soon, not sure if that makes things potentially more difficult.