Low Credit Score Applicants

[Ramiro Rodriguez]

In the screening process of prospective tenants and iv come across a family who has low credit scores but make above 3xs rental income. Previous landlords have all come back and said they have never missed any payments (similar rent payments).  What would your suggestions be? 

[Filipe Pereira]

Hey @Ramiro Rodriguez, 
I may sound like a bit of an outlier here, but we don't place as much of an emphasis on credit score as some others do. Generally speaking for a B- or C class neighborhood, we are looking for 600 or better.

However, I think the reasons for their credit score is way more important than their actual credit score. For example, do they have 15 store credit cards and tons of credit card debt? Or is it a medical debt from a few years ago when their child got sick with cancer that they just haven't been able to keep up with and therefore has dragged down their credit? both situations will reduce their credit score, however one shows a significant lack of financial principles, while the other shows hardship.

I think it is wise to assess each credit report individually beyond the actual score itself. There are also tenants with low credit scores because they simply have not built it up yet. I have rented to tenants with a 550 credit score who have never paid a day late and have been some of my best tenants yet. Meanwhile, I have had tenants with 800 plus credit scores who have been late on multiple occasions.

We have placed about 40 tenants in the last two years here in Connecticut, and have not had to evict any of them. I think that is in part due to the credit report and budget analysis that we do on each tenant application that we receive. 

There are definitely ways you can vet the person on the other end of the line when calling for a landlord reference. Always try to go at least two landlords back. Introduce yourself "Hi, my name is X, we received an application from Y where they indicated you as a personal reference. In what capacity do you know Y?" If this person is the applicant's round robin for referrals, they won't know what to say. But, if they were truly their landlord, they will say that. Another easy way to verify you are speaking with the landlord is to verify the property records / owner online at the town GIS website.