Bad Credit Welcome? Maybe

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If you read last week about credit as being our most objective piece of information in qualifying tenants then you might be surprised to know that we often recommend tenants with “bad credit”.

There are two important factors to consider when reviewing less than perfect credit reports.   First, is the details of what accounts are being reported as negative.   Second, over the past five years there has been a decline in the quality of credit reports for the average prospective tenant.

Credit reports include a variety of information relating to a person’s history of paying their debts.   On this basis the credit report is invaluable.   However, the credit report also provides information on items that may not have anything to do with a prospective tenant’s ability and desire to pay their future obligations.   Medical collection accounts are a perfect example of useless information on a credit report.   When we have a spotless credit report with three medical collection accounts, we do not even consider these as a factor in recommending them as a tenant.   We have found that they have no bearing on the tenant’s credibility at all.

Over the past several years the economy has adversely affected a lot of good quality tenants.   An applicant that had derogatory credit that was isolated to a specific time frame would likely be recommended.   If they had four credit card collection accounts back in 2004, but have had spotless credit since then, it is likely that we will recommend them as long as their income and landlord references are positive.   We see more and more of these isolated credit issues since the economy has been suffering.   If that same tenant has had a collection account every year since then, our position will be completely different and therefore we would consider that person a risk.

We will continue to be diligent in our complete review of credit reports.   Be assured that when we go over the application and credit report with you, there will be years of experience used in forming our recommendation.