I know many landlords, and despite my success at screening and selecting tenants, they often think somehow their property is different from mine. They do not think they can use the tenant credit score as a reliable indicator. They are ignoring tenant credit score to their own peril.
The fact is, tenant credit score is the most reliable indicator of tenant success that there is, bar none. You need to make sure that the tenant can afford the unit with an income of 3.5x the rent, but the tenant credit score will weed out the people that have behavioral issues and have no problem cheating anyone that they owe money to.
If you are a landlord, you know you need to do a background check. A critical piece is getting a credit report, complete with a credit score. The credit score is a summation of everything that goes on a credit report. It is calculated the same every time, with no bias to any discriminatory practices. It is colorblind and not subject to any fair housing issues.
What do you think of using tenant credit score to predict tenant payments and behaviors?
Great stuff as always. I’ve found that my property manager can’t share the specific credit scores of applicants (apparently due to privacy and/or renters right laws)? I’m very new at this so I can’t tell if they’re b.s.ing me or not.
Would obviously love to know this and screen tenants as a result…should I push the PM to share?
Thank you for the comment!
Your PM should be providing everything from all background checks that they are getting, unless they are guaranteeing the rent, damages and tenant replacement from the tenant. If you are making the tenant decisions, and you should, you need to know the information.
They should know the credit score, and what kind of credit score it is, and the ranges of the score. FICO, TranUnion Plus, Equifax, etc. If they do not know that, how can they effectively screen a tenant?
A tenant can expressly give you authorization. If the PM cannot deliver, find a PM who can. If they balk, bring me in on a conference call, and I will grill them and show your their ignorance.
Far too many PMs do not have a clue how to screen tenants, but they know most people they work for, know even less so they get away with it.
I think tenant credit score can be a great indicator of how reliable of a tenant they are. I think people who have high credit scores genuinely care about making payments on time.
Thank you for the comment!
I also notice that low score tenants have behaviors that are not ‘normal’.