A Lending Decision

Having properties for rent and the market a bit soft makes it important to locate a new tenant as fast as possible. With properties in top condition and lowered rents in place we were ready to go. With thoughts of filling some vacancies we advertised in several local hot spots and soon received a call to show a property to a woman and her child. She wandered through the first apartment then the second, returning to the first. She was quiet at first, but then began discussing the home with a friend that came along as support. They discussed where to place furniture and how wonderful the yard would be for the child to be able to go outside and safely play and for her to do some gardening.
She decided to apply for the property. After an hour we had a prospective tenant with a completed application and well on our way to filling a vacancy. This was exciting.
Returning to the office the screening process began. The first thing was to obtain a credit report. It’s on our website and spelled out on the rental application we do tenant screening on every adult applicant. We require a through screening be done and charge a fee to the tenant for that service. Tenant screening is very important and every landlord or property manager should either do it themselves or hire a company to verify a prospective tenant’s credit worthiness, rental history, criminal background and general character of the applicant. It’s a bad idea to lease to anyone with too much debt or bad debt or has any negative findings in other areas of the process. Those are a landlord or property managers golden rule or at least should be.
In all the years of working in property management and conducting tenant screening, a credit report has always included information whether it is a minor or major item of credit or comment there has always been something on a credit report. This applicant was 30 years old with a child; it’s assumed some type of credit would appear on this report. To our amazement and disbelief she had no credit. She was nonexistent in the world of credit. What should be done when accepting or denying a prospective tenant and their ability to rent this property?
This is what was determined. Our policy is to have a minimum credit rating and to demonstrate the ability to pay rent with any and all utilities or fees during occupancy. Also, they must come with a good record in all other areas. But, the credit report has always been a major area to weed out the keepers and rejects so to speak. Where does this applicant land with this issue?
We determined without a credit history we had no way to determine her ability to pay. Even obtaining raving reviews from the current landlord, friends and family the problem remained as to her credit worthiness. It doesn’t mean she would be a bad or good tenant, it means we cannot verify her credit worthiness. Also, if we indeed rented to her and later went into default for rental payments, we would not be able to locate her to collect past due payments. In order for us to offer tenancy, she would need to apply for credit. It may be necessary for her to have someone cosign on her behalf, of which we don’t accept, or be added to a joint account for a period of time. In a short time she will have a credit history upon which to base her credit worthiness and be a great candidate for a new rental.
For additional information on this and other renting articles, please visit our web site at http://www.mrpmrentals.com/
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