As a residential rental agent, screening applicants is one thing you should master to succeed in the field.

A landlord will want you to find a reliable tenant who can take care of the rented property and can pay rent on time. However, not all applicants will have those desired qualities. That is where the tenant screening process plays a vital role.

A lot of factors should be taken into account when you are looking for the ideal tenants. Since the survival of a rental business strongly relies on the steady flow of rental income, the financial stability of the rental applicant is crucial.

If you want to conduct a thorough screening based on an applicant’s financial soundness, looking at income documents alone is not enough to make conclusions. Although income is a strong indicator, other financial documents such as savings, assets, and credit scores should back it up.

For this article, we will focus on credit scores and how rental agents like yourself can interpret them when determining if an applicant is qualified to rent the property. Credit reports from the different credit bureaus will contain a person’s credit score.

What is the ideal credit score?

There is no definite answer as to what exact credit score should a potential renter have because there are multiple factors to consider, such as the location and quality of the property they are applying for.

It also does not mean that a person with a low credit score could never be eligible to rent.

To give you an idea, if the property you are marketing to tenants is located in a bad neighborhood and has physical issues or sub-standard features, you can not set the minimum credit score of 650 or more as your standard for applicants.

Credit Score Ranges

Disclaimer: The following data is from a tenant screening company based on the thousands of applications they processed in a year. It is not based on all renters across the United States.

649

A credit score of 649 is the average score in one year. That means that any score less than that is something to be concerned about.

673

An article from credit.com says that in 2016, the “average” credit score of Americans was 673 (Vantage scoring model) and a 699 (FICO model). That data is not industry-specific. It takes into account other individuals and not just renters. Statistically, renters have a lower credit score compared to homeowners.

652

According to Time.com, Adults 18-29 (the most at-risk demographic) have an average score of 652. So when a tenant applying to rent has a credit score in the 500 range, it is quite concerning.

Insufficient Credit

When a credit report contains a designation of “insufficient credit,” it often means that the individual only has a few credit-impacting accounts or tradelines. This is often seen on credit reports of students, young adults, or elderly individuals without credit activity in recent years because their needs are taken care of by their families.

Low Credit Score

No doubt, a credit score of an applicant is a valuable basis when screening tenants. However, a low credit score alone should not be a basis for rejecting an applicant.

For example, if you have to choose between an applicant with a high credit score but has three eviction records and an applicant with a low credit score but has no history of getting evicted, the latter will be a better choice.

Residential Agent Must Weigh

After publishing a listing on Padleads and getting several applicants hoping to rent the property, you as a residential agent must know how to weigh both the strengths and weaknesses of an application before making a final decision. You should also take the extra mile in determining the reason behind questionable details (e.g., low credit score) before rejecting an applicant. You do not want to miss an opportunity to find a good applicant because you made hasty decisions.