zaro

Can Landlords in NY Ask for Credit Score?

Published in New York Landlord Tenant Laws 4 mins read

Yes, landlords in New York can ask for a credit inquiry from prospective tenants. However, there are important nuances and legal considerations they must adhere to when evaluating an applicant's financial standing.

Understanding Credit Inquiries in New York

Landlords are permitted to conduct a credit inquiry as part of the rental application process, especially when applicants will be responsible for paying a portion of the rent. This allows landlords to assess a tenant's financial reliability and history of meeting obligations. A credit inquiry typically provides information about an applicant's past debts, payment patterns, and any bankruptcies or collections.

However, it's crucial for landlords to understand the distinction between making a credit inquiry and establishing rigid requirements based solely on a credit score.

The Line Between Inquiry and Discrimination

While a credit inquiry is generally permissible, requiring a specific credit score as a definitive condition for tenancy can be considered evidence of discrimination. New York law emphasizes fair housing practices, and a blanket minimum credit score requirement might disproportionately affect certain protected groups, leading to claims of discrimination.

Instead, each rental application should be considered on a comprehensive, case-by-case basis, taking into account various factors beyond just a numerical score.

Allowed vs. Potentially Discriminatory Practices

Allowed Practices Potentially Discriminatory Practices
Conducting a credit inquiry to assess financial risk Requiring a fixed minimum credit score
Reviewing an applicant's credit history Rejecting an applicant solely due to a low score
Considering the application on a case-by-case basis Applying a rigid, unyielding credit score threshold
Using credit information as one of several factors Ignoring other positive aspects of an application

Key Considerations for Landlords and Applicants

  • Case-by-Case Review: Landlords should evaluate each application individually, considering all relevant information rather than relying on a single data point like a credit score.
  • Holistic Assessment: A credit report provides a snapshot but not the complete picture. Landlords should look at the applicant's overall financial health.
  • Fair Housing Laws: Landlords must remain aware of and comply with federal, state, and local fair housing laws that prohibit discrimination based on protected characteristics.

What Landlords Should Consider

To avoid claims of discrimination and make informed decisions, landlords should adopt a holistic approach when evaluating rental applications. This includes:

  • Income Verification: Confirming the applicant's stable income to ensure they can comfortably afford the rent. A common guideline is that an applicant's gross monthly income should be at least two to three times the monthly rent.
  • Rental History: Contacting previous landlords to inquire about the applicant's past tenancy, including payment history, property maintenance, and adherence to lease terms.
  • References: Checking personal or professional references to gain insights into the applicant's character and reliability.
  • Explanation for Credit Issues: Giving applicants an opportunity to explain any negative marks on their credit report. There might be valid reasons for past financial difficulties that do not indicate a risk for future rental payments (e.g., medical emergencies, temporary unemployment).

For Renters: What to Know

As a renter, understanding your rights and how landlords might evaluate your application is essential:

  • Be Prepared: Be ready to provide documentation for income, employment, and references.
  • Know Your Credit: Obtain a copy of your own credit report before applying. This allows you to understand what a landlord will see and gives you a chance to address any inaccuracies or be prepared to explain any challenging areas.
  • Communicate: If you have a lower credit score due to past circumstances, consider proactively explaining the situation to the landlord and highlighting other strengths in your application, such as a strong income, stable employment, or excellent rental history.
  • Seek Clarity: If you are denied a rental and believe it was unfairly based on your credit score without other considerations, you have the right to understand the specific reasons for denial and potentially consult with a housing advocate.