Why is looking beyond the credit score important, even for the right tenant? The “right tenant” for some landlords means someone who has an impeccable credit score. They formulate tenant approval decisions based on the notion that an excellent credit history equates to a financially stable future. While credit scores are important, they don’t tell the whole story.
Looking Beyond Credit Score – Tenant Screening.
A landlord may pass up on an otherwise fantastic tenant if there’s too much weight placed on their credit score alone. Knowing what other factors to look for when screening applicants can help recognize a great tenant. When screening rental applicants, property owners should try to find out more about a tenant’s financial situation.
A credit report can contain a gold mine of information about someone beyond a simple credit score. This information can help a landlord in making their decision about a likely tenant’s capability to make rent in full and on time. For example, late payments on an account that is now current can bring a credit score down. But also show the applicant is now paying their bills on time.
Beyond Credit Score: The Background
Understandably, a past vehicle repossession or a credit card charge-off is a red flag for most property owners. However, it is important to take into consideration the fact that many people were affected by the Great Recession. Through no fault of their own, they may have lost their jobs or homes, but have since found steady employment and sustained their credit accounts well.
Or, possibly a previous medical emergency caused the applicant to be delayed on their medical bills or student loan payments, but they’ve made good financial choices since then. In these cases, the score might be an insignificant factor compared to the tenant’s payment history over time. A few mistakes many years ago should not prohibit an otherwise solid applicant.
The Need For References
To get the full picture, it’s necessary to gather information from the applicant that is not on the credit report itself. If the potential tenant has a good explanation for their lower credit score, it can be a reason to keep them under consideration. Also, property owners should always supplement an applicant’s credit report with references who can speak to their potential. If an applicant has a strong history of paying rent on time and a stable income, these factors may be better indicators of how they would do as a tenant than numbers on a credit report.
How We Can Help?
Tenant screening can be an intricate process, notably for single-family rental homes. Property owners usually want someone who will be a stable, long-term tenant, making the decision an even more critical one. At Real Property Management Premier, we perform a thorough screening on every applicant, from credit reports and beyond.
Our property management professionals know what to look for, and how to choose the right tenant for every rental property we run. If you would like to learn more about our screening process or would like to speak to someone, please reach us online or by phone at 954-362-5235.
We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.