Episode 228: Show Me The Money – Navigating Credit, Income, and the Tricky Edge Cases
Summary
Welcome back to the screening series! In Episode 2 of our 6 part series, Dr. Jen Salisbury dives into the financial heartbeat of tenant screening: credit and income. While these are usually your first filters, relying on a single number can be a huge mistake. We discuss how to interpret credit reports, standard income ratios, and how to handle edge cases fairly. From first-time renters with no credit to self-employed applicants with savings instead of pay stubs, you'll learn how to evaluate financial reliability without running afoul of fair housing laws. We’ll also look at real-world examples from both the US and Canada on how to manage these tricky financial scenarios.
Listen to the full episode :
This Week’s Blog Post:
Welcome to My Life as a Landlord, where we educate curious US and Canadian landlords, answer rental questions, and clear up confusions about all things housing. In this episode, I continue our six-part tenant screening series by focusing on one of the biggest filters landlords use when evaluating applicants: credit and income. Last week we talked about marketing your property to attract the right people. This week, we’re looking at wallets. Credit and income are often the first things landlords review, but if you are only looking at a three-digit credit score and calling it a day, you are likely missing the whole story. The real question is what do you do when things are kind of weird.
Reading the Story Behind the Credit Report
I explain that a credit report is much more than a score. If you are reading the report and not just the score, it shows payment history, account types, collections, and sometimes mismatches in addresses, phone numbers, and employment information. In tenancy screening, you are in a trust but verify situation. I look for patterns, not isolated incidents. A single negative report for a small phone bill is probably not a trend, but a recent pattern of unpaid utility bills, collections, or a car repossession deserves attention. I also emphasize the importance of obtaining written consent before pulling a credit report and following the applicable rules in both the United States and Canada. If you deny someone based on credit, there are requirements and procedures that must be followed, so landlords need to understand their obligations before making decisions.
No Credit Is Not the Same as Bad Credit
I spend time discussing first-time renters, students, new immigrants, and others who may not have an established credit history. Having no credit is not the same as having bad credit. Instead of automatically denying these applicants, I encourage landlords to have a written policy that allows alternative ways to assess risk. This could include reviewing bank statements, proof of enrollment, proof of sufficient funds, or requiring a cosigner or guarantor. The key is consistency. What you do for one, you must do for all. I also explain the importance of verifying identity with valid government-issued identification before conducting any screening, because background checks, court records, and credit reports are only as accurate as the information used to obtain them.
Verifying Income and Managing Risk
After credit, I move into income verification. Industry standards often require gross monthly income to be between two and three times the rent, but landlords still need to verify that income carefully. Pay stubs can be altered, documents can be falsified, and assumptions can create problems. I discuss reviewing employment information, confirming jobs where possible, and understanding alternative income sources such as pensions, government benefits, child support, self-employment income, and investment income. I share examples of applicants with new jobs, self-employed applicants, and retirees who may not fit the traditional mold but still have stable and verifiable income. The focus should always be on whether the income can be verified and whether it meets your written criteria.
The Takeaway
I close by emphasizing that money talks, but it does not always tell the whole story. Credit scores, credit reports, income documents, and financial history are all tools that help landlords make informed decisions, but they work best when combined with clear written policies and consistent processes. The weird edge cases are real world situations, and landlords need systems for handling them before they happen. Whether you are reviewing credit, verifying income, considering a cosigner, or evaluating someone with no credit history, consistency is your best friend. The goal is not just to screen tenants, but to create a process that is objective, fair, compliant, and repeatable every single time.