Should I accept this tenant?

[Emily Liu]

I have a townhouse for rent. The rent is $1300 per month. She has a credit score of 747, and has a yearly income of about $100k. But she also has “recency of a balance over limit on a bank card account”, “bankcard account balances are too high in proportion to credit limits”, and “number of delinquent accounts is too high in proportion to total number of accounts”. Is it suggested to accept her application? This is my first time being a landlord, so would appreciate your valuable suggestions/advice. 

[Nathan Gesner]

This is why I use a background check that gives me a complete credit report. You should be able to see every single account, how much debt she's carrying, what her payment history looks like, etc.

Based on what you've shown, I would probably accept her. She sounds mature with 15 years of ownership and a good credit score. She's likely more stable than a 24-year-old single mother or two short-order cooks rooming together or that guy that just moved to the area for a new job...

[Mark Smith]

First, I hate these kind of decisions it drives me nutty. I don't want to rule out good tenants due to bad data or irrelevant data nor do I want to overlook serious defects that could cause me future issues.  However, having inherited a number of tenants from past acquisitions, I can tell you the tenant pool isn't so easy to sum up in data like this.  I have some great tenants I inherited that I would have likely screened out.  I've let in one or two stinkers despite my best screening attempts.

"bankcard account balances are too high in proportion to credit limits" could mean she has an old card with a 500 limit and it's at 500 or it could be a 100K card maxed out so it's not a great benchmark without the detailed report. 

The delinquent account thing is concerning, again, look at the data and see what the root of the problem is.  If it's old or a one off that may be a data glitch or some other reasonable issue (to you). 

I would identify the precise entries in the credit file creating these issues and ask her to clarify what's up.

[Bjorn Ahlblad]

@Emily Liu She meets my minimum standards but I would check past LL, employment etc. Does she have a car loan on top of the heavily loaded credit cards. Can she continue her job through COVID? What is the debt to income ratio?

[Lynnette E.]

I had an applicant like that and I rejected her.  Good thing.  She was mentioned in social media from a bankruptcy notice.  Sounds like your applicant could be going that way soon.  Income is good, but spending it out of control.  Check your local bankruptcy rules, she may have past due rent debt released, and you can do nothing as the process is on-going, and she can take her time with it.

[Nathan Gesner]

This is why I use a background check that gives me a complete credit report. You should be able to see every single account, how much debt she's carrying, what her payment history looks like, etc.

Based on what you've shown, I would probably accept her. She sounds mature with 15 years of ownership and a good credit score. She's likely more stable than a 24-year-old single mother or two short-order cooks rooming together or that guy that just moved to the area for a new job...

[Chad Hale]

Agree with @Nathan Gesner you need a credit report that shows all of the details not just the summary statement(s).

There is a big difference of owing $550 on a $500 limit versus owing $25,000 on $20,000 limit for example.

Also, detailed reports show how many times late, 30, 60, 90, 120 days etc on all accounts.  Why accounts were closed etc.

[Aileen Jimenez]

We're in a slightly similar situation, except tenant has Poor credit (maxed out credit cards --- yes, multiple), going through divorce and selling house.  Homeowner for the past 10 years.  Good paying job (makes 3X rent).  Like some comments, I don't want to ignore poor credit but also don't want to rule her out given that she has good paying job...  According to her, credit cards were supposed to be paid by soon-to-be-ex husband, but didn't.  This would be our 3rd rental, but the other two passed all the requirements (pay, credit score, no eviction record, etc.).  

Would appreciate input, from seasoned landlords.

[Adam Martin]

Based on what I’m seeing I would probably accept as long as everything looked good.  A score in the 700s says she has been doing things right for a while.  I find a lot of renters that are recently divorced and usually make good tenants.  Make sure to check paystubs to verify employment and ensure the income looks steady.  For those saying you want to actually see the payments I use Zillow which gives me a similar view what else are you using that gives a better credit outline.  It would be nice to see accounts and actual payments like I can see on my own credit score as it is a better indicator.  

[Ming Wan]

@Nathan Gesner What background check service do you use?

[Nathan Gesner]

Originally posted by @Ming Wan:

@Nathan Gesner What background check service do you use?

I use one built into my property management software, too expensive for you to bother with. But I know there are other services:

• tenantbackgroundsearch.com
• mysmartmove.com
• singlekey.com

Those are just a couple that I believe have full credit reports.

[Mary Joe]

Originally posted by @Nathan Gesner:

This is why I use a background check that gives me a complete credit report. You should be able to see every single account, how much debt she's carrying, what her payment history looks like, etc.

Based on what you've shown, I would probably accept her. She sounds mature with 15 years of ownership and a good credit score. She's likely more stable than a 24-year-old single mother or two short-order cooks rooming together or that guy that just moved to the area for a new job...

Never mind, I just read your other post, please delete this post.  Thanks

[Mary Joe]

@Emily Liu   I usually ask for an extra month of security deposit for situations like this. I have had very good experience with tenants who are willing to put up an extra month of security deposit.

@Nathan Gesner   Not sure if things have changed now, I used MySmartMove in the past and they only gave me a YES or NO recommendation on the background check.  

[Nathan Gesner]

Originally posted by @Mary Joe:

@Emily Liu   I usually ask for an extra month of security deposit for situations like this. I have had very good experience with tenants who are willing to put up an extra month of security deposit.

@Nathan Gesner   Not sure if things have changed now, I used MySmartMove in the past and they only gave me a YES or NO recommendation on the background check.  

It's been a while since I checked. I do know many of them have different levels of detail depending on how much you pay.

[Chad Hale]

@Ming Wan and @Emily Liu

I've found tenantalert.com to provide good detailed information.

[Ming Wan]

Thank you @Chad Hale

[Michael Robbins]

High credit scores with past due balances can be interesting ones to evaluate.  The credit reports should show each account.  In the past I have approved applicants with the condition that the past due balance is paid off before final approval.  

[Drew Sygit]

In addition to getting a full credit report, we recommend using Debt-to-Income instead of income = 3x rent.

Income = 3x rent doesn't really work for applicants with a high debt load and ignores the statistic that most tenants will make their car payment before they make their rent payment:(