Should you rent to an applicant with bad credit? A low credit score alone does not tell you whether someone will pay rent on time. Clarksville landlords can make a more informed decision by reviewing credit alongside verified income, rental history, and other information relevant to the tenancy.
This guide explains how to screen applicants consistently, consider relevant context, and follow the required steps when a tenant screening report affects your decision.
What Does Bad Credit Tell a Landlord?
A credit report can show payment history, outstanding debts, and other financial information. It may reveal a concern worth examining, but it cannot predict with certainty how an applicant will handle a lease. A score can also reflect older events that do not describe the applicant’s current ability to pay rent.
Review credit information as one part of the application. Consider it alongside documented income and relevant rental history, using the same written screening criteria for every applicant.
Set Your Screening Criteria Before Reviewing Applications
Write down the criteria you will use before an application arrives. These might cover income verification, rental history, information in a consumer report, and how applicants can clarify incomplete or disputed information. Apply the same process to everyone seeking the same property.
Keep a record of the information reviewed and the reason for your decision. Avoid making a decision based on an applicant’s appearance, mannerisms, personal circumstances, or a general feeling from an interview.
Verify Income and Relevant Rental History
Check the income information supplied with the application using the verification methods in your screening policy. Consider whether the applicant can meet the rent obligation; do not assume that a credit score answers that question on its own.
If your process includes contacting previous landlords, ask factual questions related to the tenancy, such as whether rent was paid as agreed and whether the lease terms were followed. Give each applicant the same opportunity to provide the information your policy requires.
Review the Credit Report in Context
Look at the information behind the score rather than treating one number as a universal pass or fail. There is no credit score that guarantees a reliable tenant. An applicant may also identify an error in a report or provide relevant context about an older issue.
If information needs clarification, ask factual questions tied to your written criteria and document the response. Applicants should have a consistent way to dispute or clarify information used in the decision.
Use Clear Lease Terms
Before signing, make sure the lease clearly explains the rent amount and due date, applicable late fees, maintenance responsibilities, occupancy rules, and other lawful terms. Give the applicant an opportunity to read the agreement and ask questions.
Clear terms help both parties understand their obligations. They do not replace a fair and consistent application process.
What About a Guarantor or Higher Security Deposit?
A guarantor agrees to take responsibility for specified lease obligations if the tenant does not meet them. Some landlords also consider a different deposit amount under their written screening policy. Neither option should be an automatic response to a low score.
Before offering different terms, check your policy and applicable law, and apply the criteria consistently. If information in a consumer report plays any part in requiring a guarantor or a higher security deposit, you must provide the applicant with an adverse action notice under the Fair Credit Reporting Act.
Understand Adverse Action Notices
A tenant screening report is a consumer report. Use one only for a permissible housing purpose and follow the screening provider’s requirements. If the report contributes to a decision to deny an application, require a guarantor, or charge a higher deposit, provide an adverse action notice—even if the report was only one factor in your decision.
The notice must identify the company that supplied the report, state that the reporting company did not make the rental decision, and explain the applicant’s right to dispute inaccurate information and request a free copy of the report. If a credit score itself influenced the decision, additional score disclosures may be required.
For the notice requirements and examples, see the Federal Trade Commission’s guidance for landlords using consumer reports.
Keep the Process Fair and Consistent
Screening criteria should relate to an applicant’s ability to meet the lease obligations. Apply your written process consistently and avoid assumptions based on protected personal characteristics. Tennessee prohibits discrimination in housing based on protected characteristics, including race, religion, sex, disability, and familial status.
For an overview of state protections, see the Tennessee Attorney General’s housing discrimination guidance.
Checklist Before Making a Decision
- Confirm that you are using the same written criteria and process for applicants to the property.
- Verify the income and rental information relevant to those criteria.
- Review the information behind a credit score rather than relying on the score alone.
- Check disputed or incomplete information before relying on it.
- Document the decision and any conditions offered.
- If a consumer report influenced an unfavorable decision or condition, provide the required adverse action notice.
For a broader step-by-step process, read our tenant screening checklist for Clarksville landlords.
Frequently Asked Questions
What is the lowest credit score a landlord will accept?
There is no universal minimum score for renting. A landlord should use the criteria established for the property and consider the report alongside other relevant, verified application information. A particular score does not guarantee approval or denial.
Can rent payments help a tenant build credit?
Rent payments generally affect a credit report only when they are reported through an applicable reporting service. Applicants should check whether their payments will be reported and which credit bureaus will receive that information.
What might a tenant screening report include?
Depending on the service used, a screening report may contain credit information, rental history, eviction records, or other background information. Landlords should understand what their provider supplies, use the information only for a permissible housing purpose, and follow their written screening policy.
Need Help With Tenant Screening in Clarksville?
Connerth & Co. Property Management works with Clarksville-area rental owners on tenant placement and ongoing property management. Learn about our services for landlords or contact our team with a question about your rental property.
