Landlords have traditionally looked at their prospective tenant’s credit score to help them determine the level of risk before signing a lease. At the time, it helps to understand the financial story of an applicant. But, just considering this one factor is a practice that has led to far too many bad deals for landlords. Credit score companies have different ways of calculating credit scores so an applicant could have different scores with different companies. Anywhere from 660 to 720. It is a good idea to pull scores from three credit bureaus. The point is credit score is just a score. There are several reasons for a credit score to plummet. Circumstances like a housing crash or a recession and a job loss could affect the scores. Does that mean that suddenly these people are unworthy of renting? No many now have steady jobs, families to feed, and the ability to pay their bills. Sometimes their credit scores are not reliable as the indicators of their value as tenants.
Look Further Than a Credit Score
Look for prospective tenants who do what they say and say what they mean. That is, start by considering if consistency plays a key role in their life. Did the prospective tenant show up on time to tour the property? Did they fill out their application on time? It is a reasonable assessment of an applicant without relying solely on the credit score. To make the most accurate assessment and find the right fit keep then qualities in mind.
Look for tenants who are willing to share the good, the bad, and the ugly with you. Your tenant should be ready to show you that they will be a responsible tenant. If a renter is open and honest hopefully the two of you can find the true needs for both of you.
How do you know which prospective tenants are going to be high quality and which ones are just wasting your time? Basic tenant screening questions will help you assess whether your prospective tenant is openly telling the truth. As a landlord, you want to find out if your prospective tenant will follow the rules. Ask for phone numbers and email addresses of past landlords and cross-reference these with public info to make sure they were truthful. There are good and bad reasons for moving. Make sure you can verify an applicant tells you the correct reason such as they are moving from one state to another. Call their new supervisor and ask for a letter from their employer on the company’s letter head. Do You Have Any Animals? This is a tricky area. If you have a no-pet policy simply tell them you do and ask if this will be a problem. They should bring up the issue if they have a Service or Emotional Support Animal. Just put on your detective hat and gather all the information if you cannot verify they will not be a good tenant for you.
An applicant in a hurry may not be your best tenant they may forget to send you the correct documents requested or send irrelevant dated documents. Just slow down and take your time interviewing. Do not let anyone rush you into a deal. Just remember there are many well-prepared even-keeled people coming along. You do not need to be rushed or bullied into anything.
A low credit score doesn’t automatically have to disqualify a potential renter. Independent landlords have the option to be flexible with their acceptance policies, and this kind of adaptability can give you an advantage. Checking an applicant’s income, employment background, and eviction history will give you a more well-rounded view of who they are, their ability to pay rent, and suggests whether renting to them is a risky move or not. A renter’s credit score is merely a snapshot of a moment in time. It can be a great way to start your evaluation but it should not be the only factor for your consideration.
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We are local property management experts serving Cincinnati, Dayton, Columbus, & Louisville. We manage Single-Family Homes, Apartment Buildings, and Condos. With years of experience, Real Property Management is Cincinnati, Dayton, Columbus, Louisville and Northern Kentucky’s #1 Property Management and Leasing Company.