Because you’re a real estate professional, you’re passionate about finding people the right place to live. And, because you’re a people-person invested in creating great relationships, you know that not everybody has a perfect credit history. Approaching the question of credit scores can be difficult; it’s a delicate subject. And, it’s important that, if you have a client with a challenging credit, you’re able to offer excellent service and let them know the best strategy available for them to secure a home. Scroll down to see what recommendations you can give to a renter with a challenging credit score.
A credit score is a number assigned to every individual with their own credit card. It reflects the likeliness of an individual to repay their debt. What counts as “challenging credit?” For most apartment units, credit score should be 600-620 or higher. Luxury apartments with high monthly rents tend to have higher credit barriers and a more rigorous screening processes.
A credit report is more holistic. It includes the credit report along with other things, including any past judgements made against renters.
Both pieces of information give a landlord a cohesive picture of what this individual might be like as a renter.
Vacant units are expensive, and no landlord wants to go through the painful process of an eviction. Credit scores are seen as predictive of how reliably a renter will pay their rent, so don’t undersell the importance of a credit score, either to the hopeful renter or to yourself.
Think of it from the landlord’s perspective. If they have a unit that they really need to get filled, they might accept a borderline client even with the risks associated with a renter with a lower credit score. If the unit seems like it might be fielding multiple offers, then the landlord is more likely to wait for someone with a better credit score to put in an application.
Delicately, always. Respectfully, always. Kick off the conversation while your lead is still a lead (and not yet a client!) by saying, “When you fill out a rental application, you’ll be asked to provide your credit score, credit report, and background information. Does any of that concern you?”
It’s in the client’s best interest, and yours, to be honest. So, you probably won’t have to worry about a client lying about their credit score (although, honestly, it can happen!)
Read more about how to ask your client sensitive questions below:
Related: How Do You Ask for a Credit Score? Tackling 3 Difficult Client Qualification Questions
Can you find a home for a renter with challenging credit? Often, yes. But, read on to see how you can best advise your client!
A co-signer is a person who is responsible for paying the rent if the tenant cannot. Typically family members or friends, co-signers will be on the hook (and they, too, will have to prove they earn 3x the rent). This option is often used by college students or recent college graduates. This group of young renters might have no credit, or are building credit and any losses that they take may drastically effect their budding score. Let them know about the option to obtain a co-signer!
If They Have Cash, Pay Advance Rent
Nothing speaks like cash! This option is great for a client that may have a rocky credit past so are renters with challenging credit, but have money in the bank. In order to assuage any concerns that the client will not be able to pay their rent in full and on time, the renter can pay rent in advance. A landlord might like to see up to six months.
Often times there’s a good reason behind a bad credit score. In cases like this, your client might consider sending a letter to the landlord explaining their past situations.
Keep in mind—an individual property owner is more likely to be swayed by a letter than a larger management company. Larger management companies often have more rigid standards and are unlikely to be swayed by sentiment.
It happens. Here’s what you can do:
Sometimes there’s not a lot that you can do. Your client might have a very low credit score, and may not be able to find a co-signer or the cash needed to guarantee their rent or pay rent in advance. In this case, it might be best to let your client know that it’s probably best to stay in their current housing situation until they can accrue the credit they need to rent the apartment that they want. In cases like this, a credit repair agency might be a good recommendation. A renter with challenging credit can work with professionals to get their finances to a place where renting is a serious option.
Remember—Never be critical. Never assume credit scores. Always be professional. Always treat your clients with the utmost respect. Be honest, too. If you don’t think that it’s realistic for your client to be renting a new apartment right now, let them know. Don’t waste their time, or yours. However, remember that guiding a renter with challenging credit now might make them a client later. Keep your client in your books, and let them know that you’re ready to work with them once they get that credit score to a workable place!
Renting help agents grow their sphere of influence, and get to first time homebuyers quickly. To learn more about the Rental Beast platform or to request a no-obligation demo visit Rental Beast for Real Estate Agents.
