Changing Tenant Screening Requirements?

Question

Hello,

I am trying to help my sister rent out a unit in her building in a class B area, but we are having trouble finding the right tenant. We followed suggestions and set up minimum screening requirements, one of which is a minimum credit score of 700. We have been contacted by several people, but they disappeared once we told them our minimum screening requirements. I was contacted today by a prospective tenant and was told he meets all our requirements except for the credit score.

I was wondering, is it too late to change our screening requirements? Or would this violate fair housing laws? And let's say 3 months later, we still can't find a tenant with our screening requirements - does this mean we can't do anything about it?

Thanks!

Nathan Gesner · Answer

It would look bad if you changed them while in the process of screening applications. Since you don't have any applicants at this time, it would be safe to change the standards.

You've got to know your market better. 700 can be a pretty rare score in some markets.

Greg M. · Answer

You are free to change standards whenever you like. What you can't do is change standards specifically to exclude someone of a protected class.

If you can't find someone that meets your standards and after a period of time you reduce those standards for all applicants, you are fine. You have documented proof that you applied the prior standards to all and when no one qualified, you made a reasonable decision and reduced those standards for all applicants.

Tony Hightower · Answer

@Danny Chan Without changing your requirements,  you could add to them.

"Applicants that meet all requirements except minimum credit score can be considered. However, they will required a ##% additional deposit that is * refundable/nonrefundable*"

Kimberly H. · Answer

@Danny Chan I manage B Class rentals in the Chicago suburbs.  700 is sky high. Try 600. I would change it now. If you have contact info for those you previously told it was 700, let them know the policy has changed and it's 600 now.

Samantha Decker · Answer

Hi @Danny Chan,

Good question! Like others have mentioned, it may not be appropriate to alter your requirments while you are in the midst of screening someone, but you can make that decison for yourself. Also, while a credit score is fine to base decisons off of (most do), I like to encourage landlords to use the applicant's entire credit report to gain a more holistic view of their spending patterns.

You might even utilize a powerful tool like Income Inights, which analyzes a tenants income based of their credit report and ResidentScore, which is specifically designed for the rental industry.

Hope this helps!

Sam

Joseph Konney · Answer

Hi @Danny Chan

I usually post basic requirements on my listing so that I limit a bunch of unqualified contacting me. If you chance your requirements, you might consider reaching back out to those that have contacted you to see if they are still interested.

I like to look at the last two years of history for late/missing payments, defaulted accounts, and bankruptcies. If they meet income requirements and have had good history for two years, I'm happy. It indicates they are currently being responsible, which is most relevant and important in my opinion. A credit score spans around 7 years and a low score isn't necessarily relevant to what I feel is relevant criteria. If they had a bunch of medical bills from 5 years ago due to some unexpected catastrophe, their credit score will be hit and I might otherwise pass on a tenant who should still be a good fit.

If you offer a free pre-screening so applicants don't loose an app fee based on the criteria, they usually opt to provide a free credit report printout.

I sometimes make exceptions with a higher security deposit too.

Jonathan W. · Answer

@Danny Chan like everyone has said. 700?!?

I have tenants that are beyond qualified(big pension from honorable public service jobs, great track record and responsible people)

They have a credit score that isn’t even 700

I would recommend 620

It’s above fair credit and I consider those who have fixed their credit to have accomplished that at 620 or higher.

700!?

I got a guy who is super qualified in all respect and I honestly feel lucky to have found these people and that they love the home and his is barley above 700!

Jason D. · Answer

@Danny Chan I think you'll be opening yourself up for a lawsuit.

What if a previous potential applicant claims that you lowered your requirements for this applicant, but not for them? It could look discriminatory.

Ned J. · Answer

You'll be fine......

700 is pretty dam high in my opinion.....a good portion of 700+ people will be owners....not renters.....so your pool is quite a bit smaller. 600 is high enough to weed out the first line deadbeats and then its all about income and job stability etc

Credit score is only 1 criteria and for me, its not so much the score as it is "why" the score is what the score is...... bad medical debt, student loans, divorce vs repo cars and foreclosures ?etc..... lots of reasonable causes of a lower than perfect score that I don't see as an automatic NO

Tony S. · Answer

What are you considering a class  B area ? No specific streets or direct location .  I know city and burbs well .  Just wondering Danny

Protected class ? There is none for credit score my Friend .  .

Only in Chicago , Cook county , and Now Naperville is there a protected Class for Income .

If you use all your tools properly the score is a not the major factor ; All the other criteria jump out and it's clear that this said tenant is a x credit score because they can manage there credit and bills !!!

I like requesting last 2 months of check account activity as well

Good luck on your quest for tenants -

Changing Tenant Screening Requirements?

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