Learning more about credit and income standards to find a quality tenant, all while remaining flexible and accommodating.
Sometimes the difference between a great tenant and a bad one is a very thin line. There are a lot of seemingly wonderful candidates that can become nightmares and equally as many potential renters that may not appear promising on paper but need a chance to prove themselves as quality tenants. What should be your baseline for acceptance criteria?
The first important consideration is Fair Housing rules and regulations. Our Ikos Fairness Pledge, which is part of our Terms and Conditions, is already well-aligned with the Fair Housing Association but the seven protected classes are: race, color, religion, national origin/ethnic background, gender, familial status, and mental/physical disability. To avoid potential discrimination, it's very important to utilize the same acceptance criteria to all who apply.
The most common credit/income standards used by landlords across Ikos' platform are a 600 - 650 credit score and monthly income greater than or equal to 3x the monthly rent (not including utilities). Keep in mind that newness of a job and substantial student debt have become more common over the years. If you're worried about the renter's ability to pay, make sure to call references.
Now that you've set a baseline, how do you remain flexible/accommodating for the various renters that might inquire? Some renters might exceed credit yet be short on income and others will have high monthly earnings but an ugly-looking credit history. Some renters will be right on the edge of both your desired credit and income standards. In those scenarios - amongst many others - Ikos recommends establishing your own policy for what you will and won't consider.
Common areas of landlord-renter negotiation include:
1.) If you'd consider a lower credit score assuming there is a clear recent pattern of paying off credit lines (e.g. if accounts younger than three years are current or "as agreed" and collections have been paid).
2.) If you'd consider lower credit if student loans are the primary cause of lower credit.
3.) If you'd consider lower credit/income for a double security deposit (assuming a double deposit is permissible by your local laws and regulations) or payment for a certain number of months in rent up front. The number of months should be pre-determined.
4.) If you'd consider someone with issues in their background check assuming they are non-violent.
5.) If you'd consider a cosigner should the applicant be short of either or both credit and income.
6.) If you'd consider a short-term lease for lower credit with the option to renew, pending timely payments the first six months.
These are only six initial questions to consider and many renter situations may seem special or unique. The best way to remain flexible yet stern all while preventing discrimination is to create your own internal policy for acceptance criteria. If you still have questions, contacting your Client Advisor is a great next step!