Denied rental application. Now what?

May 1, 2014 5:07 AM

I applied yesterday for a (residential) rental application and received an adverse action letter saying I was denied because of information used in my credit reports. What options do I have to try and get the application approved?

The company who ran the check, CoreLogic SafeRent, shows a FICO score of 715 which I understand to not be great but not terrible. I don't see anything outstanding or otherwise out of the ordinary on the credit section, such as missed payments or high amounts of debt % on the cards I have. Additionally, since I am a student and can't afford the entire rent I applied with one of my parents as a co-signer and it shows their FICO score at 741; their app is listed on the 2nd half of the form and they didn't receive an adverse action letter, and it appears that they were approved. Can I use this or provide records of being a reliable tenant over the last couple of years to contest this rental decision?

Real estate company who ran the report is Urban Real Estate in Chicago if that helps at all. Please let me know if I can provide any additional or missing information in this case. Thanks in advance-

posted by JJ987E to Work & Money (12 answers total)

Every place has its own thresholds for what is minimally acceptible. I'd call the rental management company and ask them what they'd need to see from you to rent to you. You may offer more deposit, or to pay a few months in advance, or something of that nature. It may be a mistake. You never know until you ask.

A credit score of 700 is perfectly fine for 90% of anything you need to do in your life. You can always find a less restrictive place to rent.
posted by Ruthless Bunny at 5:17 AM on May 1, 2014 [2 favorites]

I thought you were supposed to receive or be able to request a copy of the credit report used to deny you, but I don't have a law or regulation to cite at the moment. Try and follow up with them, credit/background checks are notorious for being incorrect / confused with someone else.
posted by TheAdamist at 5:19 AM on May 1, 2014 [1 favorite]

Best answer: I do some real estate investing - and have several rent properties.

If the above info is correct: 715 credit score, no prior evictions, and co-signing parents - then you were NOT rejected for financial reasons. (Not unless you were looking to rent in a super exclusive, expensive building)

They stated in the letter that it was financial reasons, and I would bet they could defend that (loosely) in court - but there is something else. Financial reasons are the big one that they are allowed to cite as a reason.

There is no way to tell the real reason - they just might not like students. Or, they might be illegally rejecting your due to race. Either way, if they are going to fight you here, at the application stage - do you really want to rent from them? Are these the people you want to rely on when your heat goes out? As a perspective tenant, you should not just be thinking about if you like the apartment, you need to also be able to have a working relationship with the landlord - and it seems that do not want that.

For you, moving forward, with those financial qualifications, you should not have too much trouble finding another place.

However, I would say that if you suspect in any way, even a little bit, that you were discriminated against illegally by this landlord, then report them to the state board of realtors.
posted by Flood at 5:25 AM on May 1, 2014 [18 favorites]

You have the right to a free copy of the report they used to take adverse action against you. Here's the form to request a copy of your report.
posted by one more dead town's last parade at 5:34 AM on May 1, 2014 [1 favorite]

I think you should contact the Leasing Office directly to find out why. I work at an apartment complex and process applications. The form letters from the credit/background check system are not always clear. We don't go by the actual credit score, but the things we go by would naturally affect the score. Sometimes we can work with an applicant, like if they were denied because they had open collections (sometimes people are unaware) which they pay off and provide us with proof of that. But anyway, I would contac the office to see if you can get more specific information.
posted by Shadow Boxer at 5:38 AM on May 1, 2014 [1 favorite]

Response by poster: Thank you all for the prompt replies- In the reason for denial it looks like it has two fields to check to base the decision upon: one for information obtained from consumer reports and one for information obtained from a source other than a consumer reporting agency. They checked the first box so the reason they're "giving" is related to credit history apparently.

The app appears to be this real estate company's own proprietary forms; although we would be renting from an individual condo owner they are the owns who prepared and ran it. I emailed my contact/broker from the company before I posted this question but wanted to receive information on how to contest in the meantime. She just replied saying that my credit score should be fine and I should maybe submit a personal or landlord reference. Sounds like she is checking into it, hopefully just a glitch; my urgency is that this apartment may be off the market in a few hours and I need to get everything ready!!

Also, this for splitting a 2 bedroom condo at a relatively low price by Chicago standards; older building competitive price etc. I'm thinking the reason I may have been discriminated against was the low amount of income I personally reported, yet I'm not sure why they listed another reason.
posted by JJ987E at 5:49 AM on May 1, 2014

Best answer: As a former landlord, I agree with Flood's comment - there may be other more solid reasons for rejection, while the "rejection based on credit report" is the most easily defendible.

My guess is that they had two very-similarly-qualified applicants for the apartment, and you came out the less-preferred.

While you look good on paper for a student renter, if they had another applicant who:
--is self-sufficient; that is, not a student & can easily pay rent on his/her salary
--has a higher income; for example, a married couple with both partners working would easily outpace you on income
--has a better credit rating
--does not require a co-signer to qualify
--has no pets (if you have a pet)

That applicant is a better risk for the landlord. Also, landlords will prefer to rent to someone stable, and who has the possibility of staying long-term; in contrast, a student generally has a built in "end date" when a landlord will need to turn-over the unit.
posted by Ardea alba at 5:55 AM on May 1, 2014 [1 favorite]

I may have been discriminated against was the low amount of income I personally reported,

To be clear, though, you know that this is not what discrimination is, right? If you reported a low amount of personal income, that's plenty of reason to not rent to you. Discrimination is when they reject you for reasons that relate to you being a member of a protected class of person (i.e., based on sex, race, sexual orientation, disability, etc.). If you personally don't have sufficient wherewithal to rent the apartment, or there was another applicant who was more solvent, rejecting you is just good business.

If the market is hot enough that the unit may be rented in the next few hours, you're probably not going to change the landlord's mind that they should ignore the qualms they have with your application and rent to you after having already rejected you. Save your hustle for finding another place.
posted by Admiral Haddock at 6:42 AM on May 1, 2014 [3 favorites]

Best answer: I'm guessing that this is an instance of discrimination -- of the benign, "one is better than the other" sort -- that we all engage in hundreds of times a day. Unless you're a grad student in your 30s, you probably don't have a lengthy rental history, and your stated income isn't high. If this is a desirable apartment, it has probably been seen by numerous potential occupants, many of whom will be a better "on paper" fit in the eyes of people on the risk side of this equation.

So, the real estate people are willing to give your application a second look for errors, and you are -- presumably -- willing to jump through an extra hoop or two (extra references, enhanced deposit) in order to secure the apartment. If there is a hidden credit problem, it should come to light when they do their review, which is a "win" for you, moving forward.

Personally, that's about as far as I'd take it. Unless you have good evidence of some sort of "protected class"-style discrimination, it's better to just find another place. It stings to be rejected, especially somewhat mysteriously, but I can't see it being worth the effort or bad blood of a court case. Seriously, why live under a cloud from day one?

Another possibility to consider is that some landlords will make everyone fill out applications, regardless of their chances. But many will not encourage this or will politely dissuade the potential tenant from pursuing it. In this light, it seems more likely that your rental agency/realtor thinks you're a viable candidate. Just not the most viable, in the context of this specific unit.

TL/DR: You may be disappointed, but you'll find another place. I'd hold off on legal actions or anything else that would sully a relationship with an agency or landlord before even taking possession. That's like insulting the kid making your burger (unless you prefer spit as an ingredient).
posted by credible hulk at 7:04 AM on May 1, 2014

Response by poster: Serious gratitude to everyone involved and sorry to threadsit, but just wanted to update anyone interested: the real estate person does not think this is a concern at all and is moving forward with our application. She removed the page where her management company "denied" me and is submitting the application to people representing the owner of the property. Again, some of the confusion may be upon the fact that this was the realty company running the credit check who denied me; it sounds like it was an automatic thing that was triggered perhaps by the lack of income I reported. To her knowledge no one else has submitted an app for the unit so at the moment I am not directly competing with anyone; I'm guessing she obtained this information from the owner's agent so I'm not sure if it's 100% factual but that's what I'm being told. If it were to come down to other qualified candidates competing for the unit, I would not be surprised at all if someone else was chosen over me. However, I don't know if I would have received the adverse action letter as being rejected or just told the actual reason by the management company. I get the reasons why they would cover their asses but in this case there are no other candidates I'm competing with, I'm being denied on my own merits(or lack of).

Also yes I used the word discrimination incorrectly; it makes sense they would prefer someone who is self-sufficient over myself. I would hope the co-signer would be enough to prove I can pay rent but I understand why someone who can directly prove income may be chosen instead. It doesn't appear to be happening here yet, as nothing has still been submitted to the owner. The rejection was purely coming from the management's company credit check.
posted by JJ987E at 7:16 AM on May 1, 2014

Best answer: Core Logic reports are based on more than just a credit report. They check arrest records, housing rental history, adverse comments registered by previous landlords, terrorist watch list (really), etc. They also consider your income level relative to the cost of the property. Core Logic then boils all this info down to a single "rental worthiness number" (not the term they use) that landlords can use to make their decisions. Core Logic does not share the exact formula used to create this number, and many landlords probably don't bother to look at the details. They just have a cutoff point, and if the Core Logic number is below that they reject you.

In other words, saying that the rejection was based on the Core Logic report does not mean it was based on your credit score.

If you really want the apartment I'd suggest calling the building management to see if the rejection was issued correctly and ask whether there is an appeal process. It's possible that they looked at your income and rejected you without considering your parent's income or something.
posted by alms at 7:19 AM on May 1, 2014 [1 favorite]

Two possibilities:

(1) What Alms said -- other criteria besides FICO is most likely. Unfunded parents guarantees are of low value (no leverage, high litigation costs to collect) and are correctly scored against your rent-worthiness. (Funded guarantees where the parent puts up a multi-month rent deposit are another thing altogether...)

(2) they check that box for EVERY rejection letter. The fact is that most people they would want to reject for whatever reason would ALSO have no / weak / bad credit ratings, so it's a very non-controversial. Whether this is disguising legal discrimination (youthfulness, etc.) or illegal (race, gender, having kids if the unit isn't age-restricted).
posted by MattD at 7:46 AM on May 1, 2014