First let me say, I know there has been a lot said about this subject already.
So, I wanted to be very specific with my question.
We have a potential tenant that has plenty of verifiable income for the rent and deposit.
But, due to a foreclosure and being a hairstylist, she has very little credit and therefore very little previous payment history.
Any suggestions on other ways to qualify her?
Every person has their own perspective on screening and handling tenants. Face it - e all want the tenant with an 850 score, a huge income, who is a saint, and so on. Some landlords have a quick marker they use to screen their tenants, like MUST have a 650 score or higher, or MUST have been at their current job for 5 years, or whatever. While I go through the same semantics (i.e., credit screening, criminal screening), I also look at each person on an individual basis.
For example, I was looking to fill one of my rentals earlier this year. I got several applicants, and one looked exceptionally good. Her credit score was in the 600’s, had a steady employment history, current/former landlords checked out, etc. However, I also ran a Telecheck on her and I was surprised to find out she had written some hot checks. I definitely didn’t want that type of person in any of my rentals. All the other didn’t pan out for other reasons (mainly criminal/employment/income issues). I finally got a tenant who looked good in every aspect, but had a credit score of 520. Most people would immediately throw the app in the can. However, everything else looked good except for an eviction on his record (a second and worse red flag). Still, I thought I’d research a little more. After talking to the tenant and getting his story and then verifying the information, I concluded that while his eviction and bad credit were easily grounds to deny his app, I accepted him. Turns out he has not only paid, but pays several days before rent is due and haven’t had a single issue with him. Probably one of the best tenants I’ve eer had (knock on wood).
So, it goes to show you that art plays a considerable role in tenant screening. I know, I know, others will probably flame me for saying it, but after a while you’ll start getting a 6th sense about how to identify who is a good tenant and who is a nightmare.
Now as far as your tenant? Hard to say without knowing more information. On the surface it doesn’t look good (i.e., good income, but a foreclosure? why?).
It was a medical issue that kept her from being able to work for a while.
And since she is a hairstylist, no work no pay.
We decided to get into rentals obviously for income but also to help people by providing good, safe and clean rental units. So, we are trying to give every opportunity to accept tenants not just based on good credit scores.
In some situations, you must go with your gut instinct. My 2 lowest credit score tenants have never even been one day late on a payment.
I understand that you want to provide nice places for good people. I share the same boat with you. Be sure not to let your decision making be led by your emotions though. Big mistake.
We definitely understand that, and we are looking through very cautious glasses.
How much stock do you put into checking utility payment history?
Recently I find it hard to find anyone with good credit and have focused my attention on their income and expenses. I run credit checks to confirm they are telling me the truth about why they have credit problems and also to see what kind of debt payments they have (car loans, credit cards etc…). I compare their income to their expenses to see if they earn enough to cover all their expenses.