Credit Score Application Guidelines

Will the applicant pay the rent?

Every adult applicant should have a three credit bureau reports run. Do NOT accept the report prepared by the applicant or an agency paid by the applicant. Luckily, developing a standard around credit is somewhat easier to develop than an income standard. 

An owner can chose to develop a standard around the number of acceptable late payments, or the length of time late payments are acceptable with rules regarding charge-offs and bankruptcies. Or, you can take advantage of the FICO scores in use by many reporting agencies or the new, recently introduced “swing system.”

Information regarding credit scoring (FICO) and its meaning can be found here. [Link disabled]

Another alternative is to use a point system. With this, applicants are given points for their credit score. Late payments, charge-offs and other negative history results in the loss of points towards an acceptable application.

Obtaining and the use of, credit reports is regulated by federal law under the Fair Credit Reporting Act ( FCRA ).  Any person or firm who obtains a credit report for the purpose of extending credit must comply with the law, even if they run only a single credit report a year.  When you rent to an applicant, you are extending them credit.  Therefore, all landlords who run credit reports must comply with the law.  There are no “small landlord” exceptions to these requirements. 

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