A viewer named Rose asked me a question I get all the time: would I ever accept a rental applicant with a very low credit score? It’s a fair question — in Philadelphia, plenty of solid, hard-working people have credit scores under 650. Turning every one of them away means a longer vacancy, and a vacant unit costs you a lot more than a calculated risk on a tenant. So here’s exactly how I handle it at my property management company.
The Short Answer: Yes, But With Guardrails
I will accept lower-than-optimal credit scores, but I don’t do it casually and I don’t do it without a written policy. The tool I use is what we call a risk mitigation fee. It lets me say yes to a borderline applicant while protecting the owner from absorbing all the downside if things go sideways.
I’m not going extremely low, though. A credit score isn’t just a number — it’s a track record. A low score can be a signal that someone makes bad financial decisions or doesn’t pay their debts on time. Before I even think about approving an applicant in that range, I want to understand why the score is where it is.
What I’m Actually Looking For on a Credit Report
The score itself is only part of the picture. When I pull a credit report, I’m reading the story behind it:
- Is there any credit history at all? A thin file is different from a damaged file.
- Are they actively using credit and paying it? I want to see accounts that are current.
- Are there recent collections, judgments, or evictions? Old medical debt is very different from a 6-month-old eviction filing.
- Is the damage from one event (divorce, job loss, medical) or is it a pattern?
Here’s the truth most landlords miss: it doesn’t really matter how much money someone makes if they don’t prioritize paying their bills. And here’s the order people actually pay their bills in — cell phone, car payment, credit cards, then rent. Rent usually comes last. So I want evidence that this person has historically made paying their obligations a priority. For more on this, see my breakdown of how to screen a tenant properly.
How the Risk Mitigation Fee Works
The structure is simple. I set tiered credit score ranges in my written screening criteria. For example:
- 650 and above: Standard approval, no extra fee.
- 600 – 649: Approval with a monthly risk mitigation fee added to rent.
- Below 600: Generally a decline, unless there are very strong compensating factors (large additional deposit allowed by law, qualified co-signer, etc.).
The fee itself doesn’t have to be huge to be meaningful. Even an extra $15 to $25 a month adds up to $180–$300 a year — and on a multi-year tenancy, that’s real money sitting in reserve to offset the cost of a future problem, whether that’s a late payment, a turnover, or in a worst case, an eviction filing. In Philadelphia, the cost of a contested eviction can easily run $2,500 to $5,000 once you factor in lost rent, filing fees, and attorney time, so any cushion helps.
The Fair Housing Piece — Don’t Skip This
This is the part that gets landlords in trouble. You have to treat every applicant identically. If your written criteria say a 615 credit score triggers a $20 risk mitigation fee, then every applicant who comes in at 615 gets the same $20 fee. No exceptions, no “I liked this one better.”
Put it in writing. Disclose it on the rental listing. Hand it to applicants before they apply. Document everything. That’s how you stay clean on Fair Housing and avoid a complaint that costs you far more than any risk mitigation fee will ever recover. If you also need to think through what counts as qualifying income, I’ve covered that separately in my piece on rental application sources of income.
Pair Credit Review with Income Verification
Credit score never lives in a vacuum. I always pair it with an income test. My standard is gross monthly income at roughly 3x the rent, and I verify it — pay stubs, offer letter, bank statements, whatever fits the situation. A 620 credit score on someone earning 4x the rent with a stable two-year job history is a very different applicant than a 620 with inconsistent income. Read more on my approach to the rental property income requirement.
When I Still Say No
A risk mitigation fee isn’t a magic wand. I’ll still decline applicants when I see:
- An eviction filing within the last 3–5 years
- Unpaid balances owed to a previous landlord
- Active collections from utility companies (a tell that bills aren’t a priority)
- Income that doesn’t realistically support the rent, regardless of credit
Also worth noting: applicants have a right to know who’s pulling their credit and what’s on it. I explain that in who can see rental property credit check.
Bottom Line
A low credit score isn’t an automatic no. It’s an invitation to look closer. Use a written, consistent screening policy. Use a risk mitigation fee to offset the additional risk. Treat every applicant the same. Do that, and you’ll fill vacancies faster without taking on blind risk.
This is Joe White trying to answer your real estate investing questions. Good luck out there.
