Credit Many landlords set a minimum credit score requirement. Credit reports typically break down the score into red, yellow, and green ranges. For example, the FICO Score, commonly used by all three credit bureaus for rental screening, ranges from 300-850. They consider a 549 and below very poor. You don’t have to follow their guides, but it’s a great place to start. A credit score can help, but it doesn’t always tell you everything you need to know. Some landlords use collection agencies to help them collect rental debt that arises from an eviction, unpaid rent, or damages. Collection agencies will then report the unpaid debt on the applicant’s credit report. You may want to include a requirement that the applicant has no outstanding rental-related collections. You can also require the applicant not to have any line of credit that is currently 60 days or more past due, which shows a negative payment trend. Late rent could be next!
Evictions Most tenant screening companies will pull a 7-year eviction history for you. When it comes to setting your criteria, you may want to consider whether the eviction judgment was paid, which shows the tenant may have recovered financially and is responsible enough to pay their debts. Keep in mind that as of 2017 evictions no longer affect an individual's credit score unless they don’t pay the judgment against them and the landlord uses a collection agency to report it on the credit report. Landlord References Landlord references can give you the additional information that credit and background check reports don’t provide. If the tenant refuses to provide references that alone could be a reason you may want to disqualify them. Questions to ask previous landlords include: 1) What was the rent amount? 2) Did they pay on time? 3) Were there any damages to the property?
FICO Credit Score Chart from AAOA.com credit report.
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