Changing tenant screening criteria mid-marketing

[Maria Apostolova-Mihaylova]

Hi everyone, 

One of my units has been vacant for 6 weeks now and I want to try to lower the credit score requirement to see if I get more traction.

 This is a C class, my minimum requirement is 600. It is not posted but I make it known in my first reply to anyone who is interested.

How should I go about lowering my credit score requirement to avoid running into fair housing issues? I don't want to break the law, I just want to make a better business decision.

[Charles Carillo]

@Maria Apostolova-Mihaylova

Is the credit score the only issue you are finding that is stopping tenants from being approved? I would list the requirements in your ads instead of waiting for them to reach out to you; it will filter out most people. Also, I do not think I would lower my credit score below 600. The defaults start jumping up once you get under 600.

https://askwonder.com/research/credit-scores-correlation-loa...

If you do decide to take a lower credit score, make sure they are providing a larger deposit.

[Adam Bartomeo]

Fair housing doesn't say anything about credit score. Due to market conditions we no longer post credit requirements because we don't want to scare tenants away. If they are under 600 we consider it a red flag but not an immediate denial. If everything else checks out we ask for an extra deposit or advanced rent.

[Nathan Gesner]

Quote from @Maria Apostolova-Mihaylova:

You can change the terms any time you want. You just can't change the terms on someone that has already applied.

Lower your prices, not your standards.

I'm concerned that you want to lower your credit score requirement because that opens you to more risk. If the tenant's credit is terrible, you won't have the leverage to hold them accountable. When a tenant leaves owing $2,000 in damages, reporting them to a credit reporting agency may pressure them into paying you to protect their credit. If their credit sucks, they won't care, and you won't get that money.

Share your rental advertisement and ask BP users to review it and give advice based on your market and your marketing. You may have it priced too high, bad pictures, etc.

I recommend you include some of your key qualification criteria in the advertisement. For example, I mention that every adult must pay a $30 application fee, pass my credit/criminal background, make a combined income of 3x the rent, and whether or not the property accepts pets. Use the top three or four discriminators so applicants can screen themselves.

Then you need to have clear screening criteria yourself. What's the lowest credit score you will allow? Do you check Landlord references? Do you verify their income? Do you know how to read the credit/criminal background? What if they have collections or judgments?

Here's a detailed guide on how to screen applicants: Application Screening Guide

[Bryan Montross]

Personally, I don't think you should be dropping your minimum credit score to under 600. Dropping rent price is generally a better way to go. Getting less every month is still generally more cost effective than dealing with a tenant that stops paying or causes damages to the property.

However, if you do decide to change your selection criteria and you are worried about fair housing, the main thing is documentation. Keep your emails to all applicants showing that you communicated the same criteria to everyone up to a certain date and then changed it after a specific date. Create a note for yourself (even sign and date it) stating that you are changing the criteria, what you are changing it from/to, and the date you are changing it. As long as you are consistent and have documentation of changes you shouldn't have anything to worry about.

[Usher Farley]

To adjust your tenant screening criteria without any fair housing issues, it’s best to apply the new credit score requirement consistently from now on, treating all future applicants the same way. Document the change in your policy and be clear about the new criteria in your advertising or initial responses to interested renters. This can help protect you legally and keep your process fair for everyone.