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Originally Posted by tianwaifeixian
Just got an application. The rent is $1600. Tenant shows $8000 as pretax monthly income. The credit score is 646 according to tenantbackgroundsearch.com. What concerns me is that the tenant has 10k student loan (national collegiate trust) in collection and 7-8 medical bill collections with amount of several thousands. And the tenant also has about 190k active student loan. Any suggestions on whether I can rent to this person or not?
Thanks a lot
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I'd pass based on bankruptcy risk. They can't file bankruptcy on the student loans - but they CAN file bankruptcy on the medical bills. And since they are stretched to the max with student loan payments they can't get out from under - their only option is bankruptcy to get out of the medical collections.
Even if they decide to try to defer the student loans, that can only be done based on their income. Which means, losing their income so they don't have to make the payments. Maybe moving back in with Mom and Dad?
But, if they decide to file bankruptcy, they can include whatever they owe you in it. PLUS, they can often delay eviction if they file for BK. Which means, you can't kick them out, they would have owed you even more money that you can't recoup, could leave the place destroyed - and you can't collect from them.
The easiest way out of it is to say that the credit report caused the denial. You're always safe to deny someone with collections and too much debt to income ratio.
Student loans are such a sad story in the US today. Just watched a PBS Newshour show over the weekend about them and how so many baby boomers who would normally be ready for retirement are still trying to pay of their own and their kids' student loans. A shame.
But, you have to take care of you, so I agree with others who say you should deny this applicant.