Credit score slightly lower than 650 - Reject or Approve?

Question

We require all adults in the household to have a minimum of 650 as their credit score. I had a young couple see the house and they are interested in moving forward with the application process. However, the guy says he has a score of 642 due to student loans. He says he has no debt. They also said the lady has a 720+ score. None of these have been verified by me yet. Since we require a 650 minimum, my questions are:

1. Should I accept the application once these scores are verified although one of them doesn't meet our requirements?

2. Should I ask them for their combined gross salary to determine the rent to income ratio? (What's the standard ratio used)

3. I am not sure if they are married or not. Does the relationship change the equation in some way?

4. On a unrelated question, they plan on getting a dog 6 months from now. I mentioned that there will be a pet rent and a deposit based on the breed/weight of the dog (they are not sure what they'll be getting). We didn't discuss numbers. When they get a pet and they are not willing to pay the pet fee, what happens then? Also, is there usually a 12 month renewal from the day they bring in a dog since the lease will need to be amended?

Thanks

Wayne Brooks · Answer

1 reason for the score is more important than the score

2 of course, that should be part of your normal inquiry

3 not to most people

4 the pet language should be in your base lease, if you accept pets.  It wouldn’t trigger a new lease when they get a pet

Richard McCaffrey · Answer

I have seen landlords express concerns about their credit and request them to pay the first 3-6 mo rent + security deposit upfront.

The tenant has probably run into this problem more than once and if he/she is committed to renting the property they will understand and likely agree to the terms. If they don't have the cash on hand, you can probably find a better tenant.

Travis Clark · Answer

@Bob Drew Screening using SmartMove is a good choice for getting credit and criminal background checks. Of course these are important but as others have said, credit score doesn't always tell the story. We use it as a baseline, but are willing to explore why someone has a credit score below that. This means, if we find a better qualified tenant with a higher score we'll probably choose them, but if all credit scores are low, then determining the reason behind their story is key.This is where past rental history and proof of income is important. We contact as many past landlords as we can find. Our number one goal is to ensure for owner's that they are paid rent each month. From there, we want to ensure a prospective tenant doesn't have a history of damaging an owner's property. A stable rental history with provable income sources is what drives our decisions, much more than past mistakes. This has led to 0 vacancies and no late rent on our properties in 7 years.

You can ask for paystubs and W-2s for most employed individuals. If they are self employed, seeing bank statements can be useful although some states have rules on confidentiality there.

Bob Drew · Answer

Also what can I legally ask to make sure they can pay their rent. I do screen using smart move and am not sure if it checks this eligibility or not. In addition to smart move, can I ask for paystubs and bank statements?

Bob Drew · Answer

Anthony - 3 times gross or net income?

John Underwood · Answer

1. Yes I would make an exception if this is the only issue.

2. Absolutely, always ask for and verify this.

3. No, not to me.

4. Make sure they know certain breeds are not allowed and they should check with you first for approval.

Anthony Wick · Answer

@Bob Drew

Everything that Wayne said. 3 times income to rent level is normal. That’s much more important than a 642 score. I require 600 credit score, and rented to somebody at 590 after I reviewed her credit report. I did require copy of last 3 minute the bank statements for her to verify she had a nice savings account.

My “Pet Policy” (that I’m about to change to “Animal Policy”) states no pets without the prior written approval of Landlord. And that written approval/addendum can change for pet fees and pet rents as I do choose prior to allowing a new pet. And I always must meet the animal in person first.

Bob Drew · Answer

Thanks Wayne. I only accept small pets. Since they are not sure what kind of pet they are going to get, I plan on doing a lease with them with a "no pets" clause and revisiting it in 6 months when they get a pet. I can't accept the pet deposit and/or pet rent without knowing the breed/weight of the pet.

Credit score slightly lower than 650 - Reject or Approve?

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