Doubling security deposit for high risk people

[Bienes Raices]

I've been reading another forum and they recommend charging twice the security deposit if the FICO score(s) is below 600. Has anyone tried this and if so were the people willing to pay?

Also I was wondering how people here deal with "self-employed" income--do you increase the deposit for that, or just refuse to count that money as income? My concern is that it's harder to gauge, since you're relying on the applicant to provide tax records, etc,, which could be doctored.

[Mitch Kronowit]

I've learned to throw the "rule book" out. Our latest 3 tenants all paid a security deposit greater than one month's rent, for various reasons with differing results.

The first was simply an extra deposit because he had a dog. He had a very good credit score, low 700's, and was self-employed. But his business, and health, went south after a couple of months, he ran out of money, and we were forced to evict him. Lessons learned? Credit score has very little to do with character. Past performance is interesting, but anything can change in the future.

The follow on tenants had poor credit scores, high 500's, but it was obvious the delinquencies were a result of them short-selling their home. They had good income (a State of California job) and were willing to provide a high security deposit. Not 2 months as limited by California law, but it was up there. We also put in the lease that if they paid on time, without fail every month, and didn't violate any other terms of their lease for 1 year, we would refund a portion of the security deposit, which we did because they've been great tenants.

The last tenant we just placed also paid a slightly higher deposit great than one month's rent. No pets, an average credit score, good income, but going through a divorce. So the extra deposit is just that, extra security.

My friend, who has been underwriting for many many years said (paraphrased), "Credit score is just the headline of their story. You have to look deeper and see WHY their score is what it is." He's seen high scores on the verge of defaulting, i.e., living off their credit cards and home equity. Their score is good because they've always paid, but their balances keep increasing. It won't be long before they run out of credit, money, and ideas all at the same time. He's also seen people with scores in the 400's get home loans because they had a 40 year history of paying their mortgage on time, just a problem with paying anything else, especially those with several medical bills that went into collections.