Income, Credit, and Employment: Applicable Lawful Grounds to Deny a Rental Application

Landlords must consider income, credit history, and employment history when reviewing rental applications to select tenants who meet lease requirements effectively. Adhering to fair housing laws is legally required, and understanding these factors can benefit both landlords and tenants.

Income as a Legal Ground for Refusal

Rent application denials often result from insufficient income. Landlords set an income threshold using the rent-to-income ratio to ensure tenants can cover rent payments. To avoid discrimination, pay stubs or tax returns are used to verify income. If tenants cannot provide sufficient documentation, additional documentation or guarantees in uncertain earnings may be requested.

Credit History as Legal Ground of Refusal

When leasing property, renters should thoroughly review a tenant’s credit history, as landlords conduct background checks to assess past financial obligations. Poor scores or late payments can indicate difficulties in paying monthly dues. However, federal fair housing laws prohibit discrimination based on credit histories. Bankruptcies, unresolved judgments, and low credit scores can be grounds for landlords’ refusal, increasing the risk of default. However, there is no legally binding commitment on either side.

Employment Status as a Ground for Refusal

Landlords assess rental applications based on the tenant’s employment status, considering stable employment to meet rent obligations over time and unstable work histories or job changes as risks. They can revoke applications if income cannot be proven, and use pay stubs or tax returns to verify employment. They cannot discriminate solely on occupation and may deny applicants without sufficient financial stability who don’t meet rent payment deadlines. Conditional approval is granted for recent graduates, retired individuals, and those between jobs.

Fair Housing Laws and Legal Considerations

Renters must follow fair housing laws, including income, credit, and employment criteria, to avoid discrimination. The Fair Housing Act prohibits discrimination based on race, color, national origin, gender identity, or expression. Some cities and states also provide additional safeguards against discrimination based on sexual orientation or gender identification. Landlords must apply the same income, credit, and employment standards when accepting applicants. If an application is rejected, landlords may need to provide written notice, including reasons for rejection and instructions on obtaining one.

Landlords often look at three factors when considering rental applications: income, credit, and employment history. Landlords use these indicators to gauge tenant affordability for the lease agreement they seek and can reject anyone who does not meet these standards if applicable. To prevent discrimination they should use these criteria consistently and according to fair housing laws. Understanding their impact will allow tenants to better prepare applications and address potential issues more easily.