What is a credit score?
A credit score is a number that is generated by the 3 credit bureaus based on payment history and other information found in your credit report. The credit score will fall in a range from 300 (lowest) up to 850 (highest) and is meant to be a single number that summarizes an individual’s credit history.
How credit scores are created?
- Payment history
- Credit usage
- Credit history
- Credit distribution
What is a “good” credit score for tenants?
Anyone with a credit score over 670 or higher is already at or above the national average for Americans. So, if a renter has a score of 670 or higher, that’s a very good credit score for most rentals. Most landlords are looking for a score somewhere between 600 – 650 since renters don’t have the credit history of making mortgage payments to boost their credit score.
Insufficient credit on a report?
More often than not, a designation of Insufficient Credit means a tenant does not have enough tradelines or credit-impacting accounts. This is often seen with students or younger people, older people with no credit activity in years (family is taking care of them), and a spouse who has nothing in their name. In these situations, it will be up to the landlord to determine whether or not they can prove the tenant’s financial risk through other means.
Credit score break down:
Poor: 300 – 579 – Decline prospective tenant/ keep looking for tenants
Fair: 580 – 669 – Discuss specific issues with tenant on why certain things happened/ possibly require a cosigner
Good: 670 – 739 – Verify income and employment/ call tenants previous landlords
Very Good: 740 – 799 – Verify income and employment/ call tenants previous landlords Exceptional: 800 – 850 – verify Verify income and employment/ call tenants previous landlords