Does Credit Affect Section 8 Recipients?

Function

A Section 8 voucher generally covers the portion of a needy family's rent that exceeds 30 to 40 percent of its combined household income. When a family receives a voucher, they go out into the rental market and apply for apartments made available by private landlords. HUD believes that, unlike requiring subsidized renters to live in fixed low-rent developments, the Section 8 plan can deconcentrate poverty and expand employment and other opportunities, assuming benefit holders choose to seek housing in neighborhoods that include a wide range of wage earners and amenities.

Screening

Because Section 8 applicants deal with private landlords, HUD gives the landlord the right to screen prospective tenants. In fact, HUD expects landlords to put Section 8 renters through the same screening process they do unsubsidized renters. This can include running a credit check. HUD only provides landlords with a Section 8 applicant's current and prior landlord's contact information and, if applicable, a rundown of criminal activity; therefore, landlords must make sure Section 8 tenants have a track record of paying their bills in full and on time.

Considerations

When a Section 8 landlord chooses to run a Section 8 tenant's credit or conduct any other assessment of the renter's ability to pay, the voucher holder should ask the landlord to only consider these factors in relation to the amount of rent the tenant will actually pay. For instance, if a Section 8 tenant will pay $300 toward a $1,200 rental, it would be unfair to consider an applicant's credit and income vis-a-vis the $1,200 rent, because HUD will actually pay $900 of it.

Warning

If a landlord approves a Section 8 tenant and the landlord's property passes a HUD inspection, the parties execute a one-year lease. During the term of the lease, the tenant must pay the landlord his share of the rent. Failure to do so can lead to eviction and discontinuation of benefits. In terms of credit, if a landlord seeks a judgment against the tenant in court and wins, that judgment can show up on the tenant's credit report, causing considerable damage.