Are you sure credit is the most important?

Credit score range.

Hello everyone, I disagree that credit is truly the best indicator of a good tenant!!  This is Shane with TGN Property Management and I want to discuss tenant screening.  If you Google “how to screen tenants” or, “properly screen my tenants” or any other variation of that, you will find that almost 99.9% of advice out there says CREDIT IS THE BEST WAY TO DETERMINE A GOOD TENANT.

I just don’t think a number on a piece of paper that differs higher or lower between the credit bureau computers is an accurate way to determine if a REAL LIFE, living/breathing human being will be a good tenant.

So what can a credit score tell you then?  When I look at credit scores, I look to see how many delinquent accounts they have.  I’m not sure what your credit reports look like, but my credit report through Appfolio property manager has the credit score number and all of the negative factors impacting their credit score.  I ask the prospect tenant VERY detailed questions about each past due account.  You can get a sense of a persons character by how much they know about their past due accounts.   A good tenant will tend to know each and every past due account and the exact dollar amount as to how much they owe AND will be working out a re-payment plan.  A less sophisticated tenant will be confused as to what a past due account is, have no clue what they owe and have no intentions of repaying their debts!

Look, LIFE HAPPENS to us all.  Major accidents happen, car problems, medical problems, health problems with our kids or family members, etc.   Unfortunately, some of these big ticket items will happen to us unexpectedly and we won’t have the financial means to be able to cover these bills thus impacting our credit.  So a low credit score doesn’t always mean BAD TENANT.  Its a bad tenant if they don’t care and aren’t doing anything to improve their credit or repay the debt.  If a tenant simply doesn’t care, TAKE CAUTION.

Example:  I met a woman who had a perfect credit score, great job, great kids, sophisticated, smelled good, talked well, the whole nine yards.  WORST TENANT EVER.   I won’t get into details.

I met another woman for a condo I manage in Los Angeles (I dont want to be specific), 450 credit score, not the sharpest crayon in the bunch, somewhat ditzy but has been the absolute best tenant and so easy to work with.  She, of course, is working to increase her credit score and has payment plans set up.  Life just simply happened to her and she’s getting back on track.

I really like to call past landlord references that can vouge for my prospects.  I want to be able to call a landlord and have them tell me “YES THEY ARE A GREAT TENANT AND ALWAYS PAY RENT ON TIME.”  I think HUMAN BEING references are the best determining factor of a good tenant.  Also, proof of income is a HUGE one for me.  I request tax returns, bank statements, bank deposits, pay check stubs, etc to see if they can afford the place.  I ask about car loans, student loans, payment plans for past due accounts, etc.  I want to know their NET income after ALL expenses.

All in all, God gave us a thing called intuition.  Our subconscious minds and sensory tools in our minds and bodies pick up on non verbal clues all the time.  My best screening tool is my intuition.  You can usually get a feel of a person when you first meet them.  Don’t let computers determine you decisions, our God given intuition is much more accurate than any number in a computer.

JIST OF THE STORY:  USE YOUR INTUITION FIRST, THEN VERIFY INCOME AND THEN CALL PAST LANDLORD REFERENCES AND YOU WILL THEN FIND YOUR PERFECT TENANT =)

– Shane

More on this topic:

https://www.nerdwallet.com/blog/credit-cards/landlords-credit-check/

 

 

 

Posted by: emoss on July 27, 2015
Posted in: Uncategorized