Q&A: My Applicant Has Terrible Credit and Wife Has An Average Score. Should I Rent to Them?

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Question:

I recently screened a husband and wife and was surprised that they had such different scores. They seem like a nice couple, but the husband has a lot of debt and multiple collections. Is this too risky?

Answer:

There are many variables you should consider before making a decision. For instance:

• What is their combined income?
• What are their monthly obligations to their total debt?
• Is there a story behind his bad credit, possibly an ex-wife, identity fraud, unemployment, student loans, or medical illness?
• Did they pay rent on time before?

Any way you look at it there is still a risk associated with renting to these tenants. Their employment may change or a collection agency may garnish the husband’s wages making it difficult for them to pay rent. if you’re still looking to rent to them here is the best way mitigate risk:

• LeaseGuarantee: We recommend using LeaseGuarantee to protect yourself should they leave owing rent. LeaseGuarantee is offered in every AAOA tenant screening package. It starts at $299 annually and will cover you for 12 months up to $10,000 for lost rent, damages, or legal fees. That’s much more coverage than you’ll get from a security deposit alone.  Most landlords will use a portion of the security deposit to purchase LeaseGuarantee or ask their tenants with questionable credit to purchase it as a requirement of getting accepted for the rental. LeaseGuarantee covers all parties to the lease agreement, so if you get LeaseGuarantee for the wife the husband will automatically be covered as well as long as they are both listed on the lease agreement. Learn more.
• Ask for proof of income: Collect paycheck stubs from both husband and wife to ensure they have a steady income. Compare this to their total debt or account balance found on their credit report.
• Ask for bank account balance: A significant amount of savings means they are more likely to have a safety net should there be a change in their income, health, or another factor that affects their ability to pay rent.
• Check references: What others say about your applicants can show if they are trustworthy and on time with rental payments. This is a must for any tenant screening process.

If you have questions about using LeaseGuarantee please call the AAOA team at (866) 579-2262 or visit https://www.american-apartment-owners-association.org/leaseguarantee