Speaking of Credit Scores -At What Number Does A Score Scare You?

[Account Closed]

I didn't want to derail the other interesting conversation about credit scores, so thought I'd pose this as a separate question.

When I was renting to mainly techies and students, they often had no credit at all.  Often the techies were from other countries.  I'd run what I could, verify that they were students in good standing, and/or had an offer letter and I'd call HR to verify employment, and Google everybody, and run eviction/credit/criminal where I could.  This is partly why we only did M2M agreements, because we weren't always sure things would work out, though they usually did.

For the applicants who did have credit in the U.S., once the score got below 600, I was concerned.  Of course, there are other things we look at.  But, at what number do you get concerned?  And what type of property and tenant pool do you have?

The property I managed was a 26 unit, 2-story single building, no frills, no balconies, showers only, old building, high ceilings, no elevator, with mainly tiny studios (about 250 square feet).  Very clean and well-maintained, in Silicon Valley next to a university.

Anyway, the number that scared me was 599 and below.

[Chris Mason]

The FICO scoring algorithms do not accurately capture creditworthiness in many cases. 

Often times I can tell someone to put the rewards credit card away and take out a debit card for a month, and bump their FICO scores 50 points just like that. If FICO accurately captured creditworthiness, I wouldn't be able to hack it so easily. 

All a low FICO score can ever tell you is that someone isn't inclined towards understanding and hacking an algorithm, nor do they know someone that does.  This has nothing to do with the probability of them being a good tenant.

As a mortgage lender it's bullsh-t that so much is based on FICO scores. I've done million dollar loans (not my money being lent) for people with 800 FICO scores that I wouldn't let borrow a pencil (if I owned the pencil) for fear that they'd steal it (but, again, if you want to pay me to lend someone else's pencil... sure, here you are).

Conversely, I've had to say "no" to people that I would let marry my sister and lend my personal car to in exchange for a full gas tank with no hesitation, because of a stupid FICO score thing.

As landlords renting out your own property that you actually own, you are strongly advised to throw out the FICO score and look at & understand their credit history. 

Property manager or realtor doing rentals? You can choose to be like me lending out someone else's money (blindly following the end-lender's / end-landlord's guidelines regardless of if it makes sense), or choose to do the right thing and re-read the above bold/underlined statement a second time.

I have federal fair-lending law handcuffs on and cannot do the right thing re: FICO scores - I envy those of you that can.