Poor Credit - Landlord Forum thread

Poor Credit by Anonymous on May 21, 2012 @11:24

What do you do for a prospective tenant that you feel really good about; however, they have let me know they do not have good credit (due to x-wife and $60,000 worth of bills from when current wife had cancer a few years ago). They do not know anyone who can cosign; however, they are willing to provide references to all the places they can to show they do make their payments on time. (current landlord is in nursing home with dementia and by power of attorney their current place is being sold.) Any advice for other things that I can legally check on? I am a landlord newby and feel they would be just fine; however, I want to make sure that we do all we can to ensure we aren't making a bad decision (and sometimes you just don't know I am sure). I also understand that people rent for a reason (credit being one). They are hoping to build their credit so they can buy (if so, they will want to be on time with their rent). I want to help others without being a doormat.

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Re: Poor Credit by Micah on May 21, 2012 @11:37	[ Reply ]

Poor credit means they are not paying their bills on time... Run a full credit report and that will tell you who and what amount they owe. You need to set your minimum requirements and stick to them. The last thing you need is to be taken in by a sob story and get stuck with a deadbeat tenant who ends up with their wages getting garnished by someone else so they can't pay the rent!

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Re: Poor Credit by Jake on May 21, 2012 @12:24	[ Reply ]

What do you do for an applicant with poor credit? You let him float on down the river. A person acquires poor credit by beating others out of money, goods and services that will never be paid for. If you allow it, you will become one of that number.

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Re: Poor Credit by Eloise (FL) on May 21, 2012 @12:30	[ Reply ]

Agree with Micah 100%. My current tenants, I felt "really good about" just like you, they had bad credit, just like yours, because of circumstances beyond their control, just like yours, NOT my best year with them {lease ended last month, thank GOD, I am on my way to the property to probably serve a non renewal but don't even want to get into that right now}. Being a new landlord, you need someone with better credit, and wonderful references.

Re: Poor Credit by jannie (IL) on May 21, 2012 @12:34	[ Reply ]

I would get a complete credit report. And, how long have they been at their current job and what sort of income? My past tenants had gone through bankrupcy because of medical bills. They moved here and left one place because it sold, the next because our rental came up and it was nicer and closer to their work. They always paid on time. In fact, the next renter who also went through bankrupcy have paid on time. That being said, I would still be careful in checking employement and income. I wouldn't completely count them out because of the credit "number".

Re: Poor Credit by OK-LL on May 21, 2012 @13:55	[ Reply ]

People have usually earned their position in life. If it's a bad position, they earned it through poor decision-making; if it's good, they earned it through effort. Very few people just have the world drop on them. Don't be suckered. Try to remember the #1 rule of LLing -- "No good deed goes unpunished." If these folks have bad credit, it's because they couldn't or didn't (and it doesn't make a difference which word applies) pay their creditor(s). If you rent to them, you will eventually join the list of folks they have stiffed. Wait for a really qualified person and you won't be putting yourself in a position to share a burden you didn't create.

Re: Poor Credit by Douglas on May 21, 2012 @15:38	[ Reply ]

There is a proven direct relationship between current credit score and fture problems paying bills.

Re: Poor Credit by Laura (TN) on May 21, 2012 @16:59	[ Reply ]

Thank you all for your input!

Re: Poor Credit by Anonymous on May 21, 2012 @21:37	[ Reply ]

When credit is bad, money talks. The more you get up front, the less your risk. That's also backed up by credit risk model statistics. With these particular folks, they should be prepared to offer first, last and security at a minimum. Assuming a one year lease, if they can pre-pay (pre-paid rent, not a larger security deposit) the 11th or even the 10th month, your risk is lessened quite a bit. If they have a lot of skin in the game, they'll want to play by the rules in order to not lose it. Only a complete fool would do otherwise, and your instinct should be able to tell you whether or not they are one of those rare fools or not.

Re: Poor Credit by NY-LL on May 22, 2012 @12:16	[ Reply ]

For otherwise qualified tenants with stable (5+ years) employment, we require one months rent, two months security with last months rent in reserve to compensate for reparable credit issues and non-local or out-of-town references. The hard and fast rule of specific credit minimums works with medium to large dwellings with numerous tenants, but for smaller multiple family units (<3 apartments) the landlord may need to be more flexible. Account for credit and reference "divergences" based upon a qualified work history and the ability to compensate for the lack of credit.

Re: Poor Credit by Fred (MN) on May 22, 2012 @13:01	[ Reply ]

Don't rent to anybody with a poor credit score. It's really that simple. Forget what you "feel really good" about. I strongly advise you take this recommendation to heart. You will NOT feel good when they aren't paying rent and recking your property. Most common mistake by the newby is renting to a bad tenant, and trust me on this, it is a brutal mistake that you want to avoid like the plague.

Re: Poor Credit by James Bond on May 22, 2012 @16:45	[ Reply ]

I'm not trying to be rude. I really doubt you have the ability to determine if a deadbeat will pay you. If your psychic powers are that good, play the lottery. Much more to gain and a lot less to lose. "They do not know anyone who can cosign" Of course, they ran out of suckers. "however, they are willing to provide references to all the places they can to show they do make their payments on time" Their references are likely fake. A common scheme. "current landlord is in nursing home with dementia and by power of attorney their current place is being sold" Sounds fishy.

Re: Poor Credit