Can landlords deny applicants with low credit scores?

Tenant Screening in Missouri: Can Landlords Deny Applicants with Low Credit Scores?

When it comes to tenant screening in Missouri, landlords have broad discretion to evaluate prospective tenants based on various criteria, including credit history. Understanding how credit scores impact rental decisions and what legal boundaries exist in Missouri is crucial for landlords to operate fairly and effectively.

The Role of Credit Scores in Tenant Screening

Credit scores provide landlords with an indication of an applicant’s financial responsibility and ability to pay rent on time. A low credit score may suggest missed payments, high debt levels, or other financial difficulties that could increase the risk of rental default. Consequently, many landlords use credit screening as a key factor in evaluating applicants.

In Missouri, landlords commonly:

• Request credit reports from applicants.
• Review credit scores alongside other financial details.
• Use credit scores to make informed decisions about tenancy.

Can Missouri Landlords Legally Deny Applicants for Low Credit Scores?

Yes, landlords in Missouri can deny applicants based on low credit scores, provided they comply with applicable laws related to fair housing and tenant screening.

Key Points for Missouri Landlords

1. No State Law Prohibiting Credit-Based Denial

Missouri does not have any statewide law that prohibits landlords from denying a rental application solely or partially because of a low credit score. This means creditworthiness is a legitimate criterion landlords may use when screening tenants.

1. Compliance with Fair Housing Laws

Even though Missouri landlords may deny applications based on credit, they must ensure the decision does not discriminate against applicants based on protected classes such as race, color, national origin, religion, sex, disability, or familial status. The Missouri Human Rights Act and federal laws like the Fair Housing Act prohibit discriminatory rental practices.

1. Consistency in Screening Practices

To avoid claims of discrimination, landlords should apply screening criteria uniformly to all applicants. For example, if a landlord has a minimum credit score requirement, this threshold should be documented and consistently enforced.

Best Practices for Using Credit Scores in Tenant Screening

To use credit scores effectively and legally in Missouri, landlords should consider the following guidelines:

• Obtain Written Consent: Before pulling a credit report, landlords must get written permission from the applicant. This requirement aligns with the Fair Credit Reporting Act (FCRA).
• Use Written Screening Standards: Develop a clear, written policy on minimum acceptable credit scores or the types of credit issues that will lead to denial. Having documented standards helps protect landlords from accusations of arbitrary or discriminatory practices.
• Consider the Complete Financial Picture: Credit scores alone don’t tell the full story. Review other factors such as income verification, employment history, rental history, and references to create a holistic evaluation.
• Notify Applicants of Adverse Action: If an applicant is denied based in whole or in part on information in a credit report, federal law requires the landlord to provide an adverse action notice. This notice must include:

- The name and contact information of the credit reporting agency. - A statement that the credit reporting agency did not make the decision. - An explanation of the applicant’s right to obtain a free copy of the credit report within 60 days. - Information on disputing inaccurate information in the report.

• Respect Privacy and Data Security: Handle credit reports securely to protect applicants’ personal information and comply with FCRA guidelines.

Additional Missouri Considerations

• Security Deposits and Credit

In Missouri, landlords may use credit scores when determining security deposit amounts, but they must follow statutory limits on deposit amounts and return procedures.

• Local Ordinances

While Missouri does not have state-wide tenant screening restrictions, landlords should check for any local municipal rules that may impact screening criteria.

• Non-Discrimination for Section 8 and Other Assistance

Landlords cannot refuse to rent to tenants solely because they receive housing vouchers or other subsidies.

Summary

Landlords in Missouri are legally permitted to deny rental applicants based on low credit scores, provided they adhere to fair housing laws and federal regulations such as the FCRA. Establishing consistent, documented screening policies and communicating clearly with applicants can help landlords make sound, lawful tenant selection decisions. Taking a comprehensive approach to screening—reviewing credit alongside income, rental history, and other factors—can also improve tenant quality and reduce risk.