Your thoughts when 1 applicant has great credit but the other....

[Sacha LaCoss]

I have a set of applicants that are a couple moving in together.

Applicant 1 has a 773 credit score and can easily meet the 3x rent income on his own. Librarian for the city 

Applicant 2 has a 561 credit score but has obviously been improving as she has 100% on time payments, no evictions or judgments ect.. and can almost meet the 3x rent income on her own.  Graphic Designer 

both have very little debt 

Both have clean criminal ect...And have been in their current separate rentals for over 2 years each.  If I can verify that the second applicant has been current on rent ect and get a good landlord reference what do you guys think on renting to this couple? 

[Mark H.]

@Sacha LaCoss

Personally, I would go for Applicant 1. Higher credit score and a mostly secure government position that meets the income requirements on one income.

Why wouldn't you choose them over someone with a lower score and doesn't even make the income limit?

[Sacha LaCoss]

I think I wasn’t clear, they are applying together as a couple who does not currently live together but would be moving in together.  I’d never take applicant 2 over applicant 1 if they were applying separately.  I wouldn’t take applicant 2 on their own at all 

I was just wondering about others experiences when 1/2 of a couple meets requirements but the other doesn’t quite.  Together they gross over 100k for a home that has a rent of $1,300 a month.  

[Alex Forest]

Are they a couple and have already been living together for a considerable period of time, or are they roommates that have lodged together?  The Lease should be clear they are considered as one, the "Tenant". If there is an issue, they are together collectively, not treated separately.  I had two singles that moved in, with a similar background, but they were not a couple and paid separately and thought of their security deposits and responsibilities as separate.  Ultimately, they did not get along (had not lived together before but were friends before moving in together).  It's best to have a single point of contact, and when it's a couple or family that has a history of living together for some time, it's clear they are living as one "Tenant" and get along.  It also depends on the tenant pool you're seeing and working with.  The couple you mention sounds like they could be just fine. The first applicant being strong. Just some things to consider.

[Kyle J.]

@Sacha LaCoss Personally, I would take them based on what you described. The 3x income requirement is usually combined, not per person, and it sounds like they have no problem meeting that requirement together.

Also, I don’t personally put too much emphasis on applicant’s credit scores for a variety of reasons that I won’t bore you with. But even if you do, the fact that these applicants both have 100% on time payments, and no evictions/judgments, is a good sign. (I’m wondering how applicant 2’s score is in the 500’s based on what you wrote since it doesn’t sound like there’s anything negative? Is it that their credit is just relatively new?)

In any event, it all seems good enough that I’d feel comfortable moving forward once you get positive landlord references. 

[Sacha LaCoss]

Thank you both, they are a couple moving in together boyfriend/girlfriend which did also give me a little pause as we know that does not always work out.  I mention both incomes as to me it’s a sign they can afford this and are making good financial decisions in not spending more when they could.  Also because if things don’t work out applicant 1 has great credit and could easily afford the property on his own. 

Applicant pool has been smaller than usual but I expected that as we just did some upgrades/refreshes  to the home and raised the rent $350 a month, add in Covid and well here we are.  It was previously under market and needed a refresh after 9 years as a rental. 

I also wanted to bounce it off other landlords as I don’t want to allow my concern over getting it filled to allow me to make any unwise decisions when screening.  Just holding myself accountable here.  I want to stick to my guns and make sure I am diligent in screening. 

[Dave Clauson]

@Sacha LaCoss

I would also take them. One of my tenants ever was a couple very similar to them and the way you describe them. But like suggested above make sure you have a Roommate Econimic Unit addendum that says you get paid no matter what happens to them as a couple.

[Kaelyn Motzel]

I would take them - we only look for monthly income 3x the rent combined

[Chris London]

Red Flags aren't just for parades. 

I have a 650 minimum on all applicant's over the age of 18 who will be living in the home and I deal in mostly A-B class rentals. I have accepted a little below 650 with scenario's like you have described.

It sounds like from your reply to some of the responses that you are likely to move forward with these candidates so I would suggest requiring a higher security deposit (double if your state allows).

[Account Closed]

@Sacha LaCoss

Be proactive and explain fully what “joint and several” means prior to a lease signing. Lay it on thick. I deal with 20 somethings almost exclusively and explain it like this: “if you come home and little Susie has your cousin in the bedroom doing some Eyes Wide Shut type stuff, you’re still fully liable for the duration of the lease even if you move out and she starts moving through your entire family. And if she comes home and YOU’RE the one doing the freaky stuff with HER cousin, it’s going to be even worse. ... you good with that? Because if you think she’ll be stalking you for throwing your junk around imagine what I’ll be doing to collect the remainder of the... $24,000 or so written on this lease agreement.”

At that point I explain to the how Tom Cruise has been doing brutal movies since before they were born and how even he won’t be able to get them out of it if they skip on me.

[John Litzenberger]

@Sacha LaCoss

Pretty good

[John Vesky]

@Kyle J. You don’t put too much emphasis on credit scores? I’m very curious to know why? Is it because it’s a D class property and finding good credit is difficult?

I understand giving applicants a break on the student loans and If I were renting and personally interviewing the applicants some consideration for exceptional applicants , but i’m curious to why you don’t put too much weight on credit in general.

[Sacha LaCoss]

[Kyle J.]

Originally posted by @John Vesky:

@Kyle J. You don’t put too much emphasis on credit scores? I’m very curious to know why? Is it because it’s a D class property and finding good credit is difficult?

I understand giving applicants a break on the student loans and If I were renting and personally interviewing the applicants some consideration for exceptional applicants , but i’m curious to why you don’t put too much weight on credit in general.

The reason why I personally don't put too much emphasis on credit scores is because I've never found a strong correlation between the numerical scores and how good a tenant the person will be.   I think most landlords just use credit scores because they're accustomed to having banks do that to them when they apply for mortgages, and because it's "easy" to have a number/cutoff point that someone either falls above or below to help them in the decision-making process.

But I've owned and rented out A, B, and C class rentals (no D class) to all types of tenants...everything from professional tenants making 5 figures per month, to Section 8 tenants.  I've had tenants with credit scores in the upper 700's, down to the lowest at 490, and plenty in the middle (500's and 600's). 

To be clear, I'm not saying I don't look at credit scores or credit reports.  I do.  I just don't have a minimum score as one of my requirements.  I take a VERY thorough look at the credit reports of my applicants.  I just don't really care what the numerical score is. 

When I pull credit reports, I have the ability to directly pull the actual report and see everything on it.  I'm not getting a generic report or some "recommendation" to approve or deny like some services provide.  I'm getting the full report, including the full account history, record of on time or late pays, any amounts owed or past due, any amounts discharged/charged-off or sent to collections, types of accounts, etc. 

And those are all the things I take into consideration.  To me, there's a big difference between someone who has a "low" credit score because they have 10 credit card accounts past-due or in collections, and someone who has a "low" credit score because they have a medical account in collections and a $3,500 monthly mortgage that's over 90 days past due and is about to go into foreclosure (hence the reason they're looking for a place to rent).  The former shows a pattern of bad consumer spending, the latter shows someone who had an unforeseen medical expense and also got into a house that they couldn't afford and now they're about to lose that house (and the payment) and should have no problem paying the rent on my rental house. 

Anyway, I'm not trying to convince you my way is right and the other way is wrong.  I'm only responding because you asked.  I don't even usually talk about this on here because I know people like using credit scores to screen people.  It's just not something I do.  For what it's worth, most of my tenants have been with me 5-7+ years, I've never had to do an eviction, none of my tenants pay late, and even during this COVID-19 pandemic, not a single one of them missed a payment or even paid late.  So who knows.  Maybe there's something to this voodoo science I'm doing.  :)

[Kenneth Garrett]

I use a scoring model certain items are weighted more than others. The following criteria is a sampling of what I use, but as things change I need to change with it.  So it’s an ever evolving system.

Credit Score 600 or better - you have to look at what makes up the score.  The number can be deceiving.   
Income - 3 times the rent.  
Debt to Income - not greater than 45% which includes the rent   
Employment - Less than a year, 1-3 years and over 3 years - stability is given higher points  
Smoker loses points - smoking is prohibited on the property, but the clothes reeking of smoke does require more work when they move out.
Previous Eviction less than 5 years ago - automatic no