Tenant Screening Practices Can Unnecessarily Prevent Voucher Holders from Renting

By Esther Y. Colón-Bermúdez, Research Analyst 

A recent study published in Housing Studies, “Choice Denied: Impact of Income and Credit-Based Tenant Screening on the Housing Choice Voucher (HCV) Program” analyzed how tenant screening practices, particularly those based on credit scores and financial histories, impact Housing Choice Voucher (HCV) holders in securing leases. The study found that many HCV holders are likely being denied or face hurdles due to criteria that should be irrelevant given that their voucher guarantees rent payment. In fact, 1 in 10 voucher holders applying for a lease is likely denied or faces extra barriers because of factors like minimum credit score requirements or past late payments, even though the voucher itself should remove those concerns. 

Many private landlords, including those who lease to voucher holders, utilize tenant screening services. These services use data such as credit scores, criminal justice histories, and eviction filling records for their tenant screening processes, which can reinforce longstanding racial and economic disparities experienced by low-income renters and renters of color. Certain screening criteria, such as minimum credit scores and rent-to-income requirements, might also be irrelevant for voucher holders and lead to unnecessary denials of lease applications. These criteria are irrelevant for voucher holders because the HCV program is designed to guarantee rent payment, so a voucher holder’s credit or income history doesn’t affect their ability to pay. These practices can exclude voucher holders from housing and push them toward homelessness or result in losing their voucher. 

To better understand how tenant screening criteria impact voucher holders in the leasing process, the authors collected 1,227 rental screening criteria documents from property management platforms. The authors then combined these documents with HUD's Picture of Subsidized Households data and the Survey of Consumer Finances (SCF) 2019, a dataset with information on household assets, debts, and housing subsidies. They estimated credit scores for households via a machine learning model. Using these resources, the authors estimated the probability of non-acceptance, representing how often landlords might deny, add security deposits, or require further review from applicants. They categorized households into three groups: renters with subsidies (those receiving government or employer rent assistance), voucher-eligible renters (those paying rent without subsidies but who could qualify for HCV based on income), and renters without subsidies (used as a reference group). The authors then focused on ten screening criteria likely to impact voucher holder applicants: minimum credit score, debt-to-income ratio, rent-to-income ratio, rent-to-net-income ratio, bankruptcy criteria, late payment, and allowed past-due debt policies. 

The authors found that renters without subsidies were likely to be rejected or face extra barriers 45.3% of the time due to tenant screening criteria. This rate of barriers is significantly higher than what renters with subsidies (10.3%) or voucher eligible renters (8.5%) encountered under tenant screening criteria. This difference is mostly due to rent-to-income ratio, which many voucher applicants meet because the program covers most of their rent. Voucher applicant groups, however, are not completely immune to tenant screening practices. Minimum credit score requirements were a significant barrier for both groups, leading to 60% of rejections or added hurdles across simulated applicants. Renters with subsidies were likely to face rejection or added hurdles because of minimum credit score rules 6.3% of the time, while voucher-eligible renters were likely to be denied or face additional hurdles 4.9% of the time compared to renters without subsidies who faced additional hurdles 5.74% of the time. Overall, voucher applicants were less vulnerable to screening criteria than other renters, likely due to the protection provided by the voucher, but voucher-holders still encountered significant barriers. About 1 in 10 voucher applicants faced rejection or added hurdles to renting because of income and credit-related criteria. 

The study concluded that many of the risks commonly flagged by tenant screening services, such as low credit scores or past nonpayment eviction fillings, were largely resolved by the structure of the HCV program itself, which guarantees rent payment. Even so, past financial issues still lead to denials or required applicants to provide additional security deposits when landlords utilized tenant screening processes. The authors argue that federal protections are needed to ensure voucher holders are not unfairly excluded from housing opportunities and recommend that agencies like HUD, the FTC, and the CFPB establish clearer regulations that explicitly protect voucher holders from discriminatory tenant screening practices. 

This article can be found at: https://bit.ly/3FuVS95.