What Minimum Credit Score Should I Accept for Tenant Screening Criteria?
We recently received this question from a prospective client: “Why do you accept tenants with such a low credit score?” The key is the qualifying factors that are above and beyond the specific tenant screening criteria.
Tenant screening criteria is vital to a successful application process. If you are a new landlord or even have been in the business for years, there may be factors that you aren’t taking advantage of when screening an applicant. Let’s look at some of these factors and see why our credit score minimums start at 500.
Tenant Screening Criteria at APMG
To begin, you need to know our different credit score minimums. Through our years of experience and thousands of leases, we have learned that you can’t throw all applicants and rentals into one box. For a complete list of our screening factors, check out the screening criteria on our website. We divide our screening criteria into four sections (with their respective credit minimums):
- Properties Priced Over $1000 per Month: 600
- Properties Priced Under $1000 per Month : 550
- Properties Accepting Section 8: 500
- Guarantors: 700
A MIMINIMUM OF 500?? Don’t write us off yet! Keep reading below to see why and how we accept these credit scores.
You Asked, Here’s Our Answer:
Why do we accept such a low credit score? If you were to go solely based on credit score alone, it would probably be too low. In fact, even if you were to follow our screening criteria exactly, you may still get poor prospects. The key is the qualifying factors that are above and beyond our specific screening criteria:
- The steps required to view a vacant home
- Application fee
- Online application submission process
- A full month of rent and a full deposit before move in requirement
Let’s look at these a bit closer:
Steps to View a Vacant Home
Before viewing a vacant home, we have a set of prescreening questions we ask to all prospects. This immediately helps weed out the unqualified prospects before wasting anyones time or money with the application.
Our application fee is the first step in an applicant telling us they are ready, willing, and able to rent a property. Without this fee, the applicant has nothing to lose when applying for a rental. With this fee in place, we found applicants are more likely to be honest about their background information and educated on our screening criteria BEFORE applying. This results in a higher acceptance rate.
Online Application Process
Our online application is not a quick and easy form. It asks for personal info, prior rental info, vehicle info, and employment info, to name a few. We also require pay stubs and other qualifying information as it applies.
Full Month’s Rent and Deposit
DIY Landlords will often skimp on this step. They want to get a tenant in as quick as possible to start paying rent. Or they feel sorry for an applicant and will fold.
To rent from us, you must have a FULL month’s rent and FULL Deposit. No Exceptions. This establishes our requirements right away. In addition, you have a full rent and deposit if something were to happen after move in.
With these factors in place, we end up weeding out many of the prospects – Prospects who would otherwise have been a poor decision if we were to stop at a credit score or other specific tenant screening criteria.
What Happens If You Raise the Credit Minimum
Why not just have a higher minimum? For one thing, when the credit score is too high, the renter pool gets limited quickly. To keep it in perspective, a person can now be approved for a mortgage with a credit score of about 620. And with the housing market as hot as it is, this may be decreasing.
The Final Results
Our Eviction Rate Speaks for Itself
At the end of the day our record says a lot about our screening. Since 2015 we have only evicted 5 tenants that we had screened and one of those was due to a nasty divorce. When you consider that we are writing or renewing over 300 leases annually this equates to less than 0.5%.
Eviction Rate of Tenants Placed by Others
On the opposite side, in the same time frame (since 2015) we have evicted 9 tenants placed by owners or other managers (NOT screened by us). This is almost twice as many!
Here are some more helpful blogs to learn more about screening, and leasing.