Our friends at SmartMove contributed an article on assessing “what is a bad credit score” in terms of evaluating a rental applicant’s credit history.
Based on TransUnion research, it is clear that an independent landlord’s number one concern is being paid on time. Evaluating an applicant’s credit report is a good way to review their history of making timely payments and forming an opinion about if they will pay on time in the future.
When it comes to reading a credit report for tenant screening, TransUnion research revealed that many landlords have expressed that they are comfortable with reading the report. In terms of interpreting credit report information to make a leasing decision, landlords will need to be clear on what data will have an impact on their criteria to qualify or deny rental applicants.
Going into the tenant screening process, a landlord might have formed an opinion on a minimum credit score cut-off. But there is more to properly screening a new tenant than just focusing only on a score.
In TransUnion’s view, there isn’t a definitive “good” credit score. While it is common to have scoring ranges that describe good and bad credit score, it is important to read an applicant’s credit report and understand what the information it is telling you.
Plus it is important for a landlord to understand their risk tolerance as it relates to an applicant’s credit background. While a credit score is a good indicator a potential tenant’s ability to pay the landlord on time, a low credit score doesn’t have to be an automatic disqualifier.
When evaluating a tenant with poor credit, a landlord might want to get the full picture before making a decision. Checking an applicant’s employment status, income level, criminal background and eviction history will give you a more well-rounded view of who they are, their ability to pay rent, and helps better inform the risk involved.
If you liked this article, subscribe to Rentometer's email newsletter to stay up-to-date on the latest trends in rental housing.