A point scoring system creates an objective set of criteria by which you can safely reject unqualified candidates without fear of discrimination charges.
It's very important to review the point scoring system and tailor it to suit your business. Some landlords run profitable businesses dealing with folks who are so poor they don't even have housing vouchers (section 8). Others require perfect-credit tenants for luxury apartments. Adjust your point system according to how you operate.
It's also important to customize your disqualification criteria. Maybe waterbeds are okay. Maybe you're okay with a tenant who falsifies information. We recommend you stick with our default disqualifications until you know better. A king waterbed holds 300 gallons of water, enough to destroy one floor and the floors below; lying now means lying later, after they have possession of your apartment.
Whatever you decide, set your point scoring system before you start screening applicants and stick to the same scoring system until the apartment is rented and keys are transferred. You can change it based on your experience after the handover but not before. Otherwise you will fail to provide a consistent paper trail should you be called to court for discrimination.
The default scoring presented here makes it difficult but still possible for a.) first-time renters with a co-signer, and b.) bad credit applicants with either high paying jobs or good references.
If a tenant has too few points, you should explain the situation to them and help them to get more points. For instance, our rental application asks tenants if they could borrow money from anyone in the event of a short-term hardship. Well, the name alone is worthless, but if the individual they name has assets and will agree to cosign, now your applicant gets another ten points. In this way you can learn how responsive and cooperative a tenant is, how much they want the apartment, and whether you can find a way to work together on shared problems.
FAQ: If my rent includes utilities, should I consider accepting a lower rent-to-income ratio?
Good question! All our rental forms should be considered a starting point for landlords, to be customized to fit your specific situation. For example, many of our landlords will rent at a lower ratio than 3x if the applicant has a good credit score.
If your rent includes utilities, then you may want to factor that in to your consideration, particularly when you are determining whether the tenant has sufficient ability to pay based on our points system on the qualifier form.
- SUFFICIENT ABILITY TO PAY? Gross income divided by rent is greater than 3.6 counting all earners
- Now disregard NOT OVER-REACHING? if disposable income is increasing faster than rent.
- Add note about verifications and tentative score vs. final score.
- Award 10 points for STABLE ABILITY TO PAY? only if the previous ability to pay is broadly similar.
- Substantial modifications to defaults following best practice and guidance on equal housing opportunity:
- Re: evictions: Separated cause and non-payment evictions from “no fault” evictions, except where the prior landlord alleges witness intimidation or similar reason to bring a “no fault” case.
- Invited a detailed break-down of the types of court cases and outcomes.
- Offered positive credit for successful payment plans with the previous landlord or for having satisfied all past judgments.
- Re: drugs: Made it clear that HUD permits disqualification only for conviction for manufacture or distribution (not possession).
- Re: arson, now clarified that this is a permanent disqualification. If you offer full cement and rebar construction (rare), you should remove this disqualifier.
- Re: legal occupancy: Made it clear that square footage requirements are to be used (not room counts).
- Re: Suspected hoarding, added exemption for reasonable accommodation (e.g., undergoing treatment).
- Re: rental subsidies, made it clear where especially Section 8 requires waiving income tests or intended rental agreement duration
- Re: blanks, provided guidance on helping applicants to achieve passing point scores.
- Re: make-up credit, allowed explicit definition of higher rent to offset risk elsewhere.
- Re: over-reaching, simplified cut-offs.
- Made general formatting improvements.
- v9 through v10
- Internal use.
- Added a reminder about the need to check for convictions.
- Clarified that convictions alone are not allowable as a disqualifier, following updated HUD guidance April 4, 2016. Used the limits in place at many housing authorities (5 years) for illegal drugs, violent crime, or Class 2 or 3 sex offense.
- Clarified that other forms of documentation are acceptable besides “doctor’s notes” for service animals/emotional support animals.
- Not published.
- First version.
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