The Score Is Overrated
Most landlords treat the credit score as a pass/fail gate. Above 650, you're in. Below, you're out. It's simple, fast, and wrong more often than it should be. A credit score is a composite number generated by an algorithm designed for lenders evaluating loan risk, not landlords evaluating tenant risk. The two overlap but they're not the same thing.
A tenant with a 580 score might have medical collections dragging them down but perfect rent payment history for the last five years. A tenant with a 720 might have a pristine credit file because they've always had family money to fall back on — but they've never actually managed rent payments independently. The score doesn't distinguish between these situations. The report details do.
That doesn't mean you should ignore the score. It's useful as a quick initial filter and as one data point among many. But the landlords who make the best tenant decisions are the ones who open the full report and read what's behind the number.
What to Look For in the Report
Payment history patterns: This is the most predictive section for landlords. Look at how the applicant handles recurring monthly obligations — credit cards, auto loans, student loans, personal loans. A pattern of on-time payments across multiple accounts over multiple years indicates someone who manages recurring bills reliably. Scattered late payments, especially recent ones, indicate inconsistency that will likely extend to rent payments.
Debt-to-income implications: The credit report shows outstanding balances and minimum payments. Add up the monthly obligations listed — car payments, minimum credit card payments, student loan payments, personal loans. Subtract that total from the applicant's verified income, and then see if the remaining amount comfortably covers rent plus basic living expenses. An applicant who earns $4,000 per month but has $1,800 in existing monthly debt obligations is not the same risk as one earning $4,000 with $400 in obligations, even if their credit scores are identical.
Collections: Not all collections are equal. Medical collections are extremely common, often result from insurance disputes rather than irresponsibility, and are a weak predictor of rental behavior. Utility collections, telecommunications collections, and especially prior rental-related collections are much more relevant because they indicate a pattern of not paying for services that have direct parallels to rent.
Inquiries: Multiple hard inquiries in a short period can indicate financial distress — the applicant may be seeking credit from multiple sources because they've been denied elsewhere. Rate shopping for auto or mortgage loans creates clustered inquiries that scoring models typically treat as a single event, but random credit applications across different types of lenders can be a warning sign.
Setting Credit Standards That Work
Rather than a single score cutoff, consider a tiered approach that accounts for the nuance in credit data. An applicant with a 700+ score and clean payment history is a straightforward approval on the credit component. An applicant in the 620-699 range warrants closer examination of the report details — are the issues recent or old? Medical or financial? Isolated or patterned? An applicant below 620 has significant credit issues that need to be weighed heavily against the other screening components.
Whatever standards you set, apply them consistently and document them as part of your written screening criteria. This isn't just good practice — it's a Fair Housing requirement. Your credit criteria should be the same for every applicant, applied before you know anything about the applicant's protected class characteristics.
Credit is one piece of the puzzle. Combine it with income ratio analysis and behavioral signals for a complete financial and behavioral profile. Then feed everything into your scoring framework. For a walkthrough of the full screening process including what services to use, check out this comprehensive screening guide.
Credit Reports and Rental History: Different Data, Same Question
Credit reports and rental history checks both answer the question "will this person pay?" but from different angles. The credit report shows how they handle financial obligations in general. Rental history shows how they handle the specific obligation of rent. When both point in the same direction — strong credit plus strong landlord references, or weak credit plus negative landlord feedback — your confidence in the prediction increases significantly.
The interesting cases are the mismatches. Strong credit but weak rental references might indicate someone who prioritizes credit card payments over rent, or who has personal conflicts with landlords despite financial responsibility. Weak credit but strong rental references might indicate someone who has experienced financial hardship but has always prioritized housing — arguably a positive signal for a landlord. These mismatches are where your scoring system earns its value by forcing you to weigh competing signals rather than defaulting to a single number.
Legal Considerations
Using credit information in tenant screening carries legal obligations. You must have the applicant's written consent before pulling their credit report. You must follow Adverse Action requirements under the Fair Credit Reporting Act if you deny an applicant based in whole or in part on credit information — this means providing written notice of the denial, the name of the screening company, and the applicant's right to obtain a free copy of their report and dispute inaccuracies.
Some states and cities have additional restrictions on how credit information can be used in housing decisions. A handful of jurisdictions have banned or restricted the use of credit checks entirely for rental applications. Know your local laws before incorporating credit into your screening process, and make sure your approach complies with both federal and local requirements. The Fair Housing guide covers the legal framework in more detail.