Credit Checks on HUD Tenants in NY

[Amber Forkey]

Hi All! Looking to open a discussion on the legality of running credit checks on section 8/DSS tenants.

Question: If the government program is not paying 100% of the rent, are we able to pull a credit report?

Example: Sally receives an $800 section 8 voucher. Rent is $1,200 so she is responsible for $400 of rent. To my understanding, you only need to show that the prospective tenants make three times the amount that they are responsible for (in this case $400) in income per month in order to qualify. However, are you able to do a credit check on these individuals as well?

When it's 100% funding I understand you can't pull a credit (backgrounds are still permitted though).

This is a gray area that I've not found much guidance on.

[Richard F.]

Aloha,

You are correct, there is not much reliable guidance, or clear law, on the subject. Just that "you cannot discriminate". I would be curious to learn where you found that credit cannot be run for someone that is 100% subsidized. I have never heard that before. A full credit report is generally the first and best indicator of the quality of a prospect, and provides more than simple "credit" information...it generally provides multiple prior addresses with dates, aliases, employment info, and other useful data. Also, just because someone is subsidized does not mean they have no open accounts/outstanding balances. Those items become even more critical to be aware of.

In the spirit of "not discriminating", all of our applicants need to have verifiable income of 2.5 times the rent, and that income would include any subsidy. Gas, food, clothing, utilities, all cost the same whether you are rent subsidized or not, so there must be other verifiable resources to readily pay for those items. According to recent news sources, 63 % of the US population lives paycheck to paycheck, so depending on the ratio you look for in rent to income, if the rent is $1200, typical renters would then spend around $2228 for other expenses each month (based on 35% rent to income). Your subsidized prospect would need $400 for rent, plus $2228 just to make the typical "paycheck to paycheck" income. Add the fact they probably have no savings, poor or no credit, and no other verifiable income, they may, or may not, meet your standard of credit risk.