Can You Deny Rental Applicants Based on Credit Score Alone?

Answer

Short answer: you can consider a credit score, but you cannot rely on it as the only basis for denying applicants without risking legal problems. Landlords must obey the Fair Credit Reporting Act (FCRA) and federal fair housing laws, and many states or cities add extra restrictions or require individualized review.

Under the FCRA, if you take an adverse action (deny the application, raise the deposit, or require a co-signer) based on a consumer report, you must provide a timely adverse-action notice that includes the credit reporting agency’s name, a statement of the applicant’s rights, and how to obtain a free copy of the report. Failing to follow FCRA notice requirements can lead to liability even if your underlying screening policy is lawful. Landlords also should be aware that tenant-screening reports and scoring models can contain errors that applicants have the right to dispute.

Separately, the Fair Housing Act prohibits discrimination against protected classes. A blanket policy that denies everyone under a certain credit score may have a disparate impact if it disproportionately excludes applicants of a protected group (by race, national origin, familial status, disability, etc.). HUD has warned that overly broad screening rules and opaque algorithmic scores can create discriminatory outcomes, so landlords should tailor criteria to legitimate tenancy necessities (ability to pay, prior evictions, lease compliance) and avoid rules that are unnecessary or overbroad.

State and local laws often tighten the rules. Several jurisdictions require landlords to consider alternative proof of ability to pay (pay stubs, references, a guarantor) or limit how screening reports and scores may be used — for example, protections for applicants using government rental assistance. Check applicable state and municipal rules before adopting a strict credit cutoff.

Practical, compliance-minded approach:

• Use consistent, written screening criteria and apply them uniformly to avoid disparate treatment claims.
• Perform individualized assessments — consider income relative to rent, recent credit improvements, and explanations for medical or emergency debts.
• Document decisions and keep records of reports, communications, and any accommodations or alternate proofs you accepted.
• Follow FCRA adverse-action procedures exactly when denying or imposing conditions based on a consumer report.

In short, a credit score can be an important screening tool, but relying on it alone creates legal risk and may block otherwise qualified applicants. It’s advisable to adopt transparent, job-related criteria, offer an opportunity for applicants to explain or supplement their reports, and consult a licensed attorney or local housing authority to align your policy with federal, state, and local rules.