Property Manager – Calabasas
What is on a Credit Report?
There are many different agencies that create a report, and different companies use different formats. There is only one company that has a FICO score, and that is the Fair Isaac Company. Many companies, such as Equifax, TransUnion and Experian use this score, but not exclusively. Regardless of the format of the report, here are some things you can look for.
The basics are there. All accounts that are associated with the social security number are on the report. I am sure that at some point unused dormant credit drops from the report. They will show delinquencies and on-time accounts. Watch for recent accounts being delinquent, and watch for small balances showing up. If you bail on a cell phone contract, it shows up. If you do not pay the light bills, it shows up. People who cannot pay small bills are high-risk.
Past Addresses
You need to understand the past address section. People who have too many addresses in the past five years are high risk. If someone has three or more addresses in the past five years, you may want to avoid them. They move too often for you to make a profit. Why is it necessary to move every year or two? It may be legitimate, but it could also be a forced move situation. The credit score will shed light on the reasons, regardless of what the tenant says the reason is.
You should also check if the addresses on the credit report are the same addresses that are on the application. Did the applicant conveniently forget one (or more)?
Collections
When you owe a company money, it could be due to a dispute on the bill. It may make for a late payment mark on your report. It may go into collections, or the company may write off the amount owed. If the collection is a landlord or apartment complex, it is a huge red flag. Knowing the names of the complexes around your area will help you identify apartment collection entries on the credit report.
Are there a lot of medical collections? A medical issue is one of the few things that cannot be anticipated. Of course, having decent health insurance and an emergency fund helps you anticipate…
Virtually all collections are a result of the tenant saying to someone that they will pay, and the tenant did not. Cell phone collections are a huge red flag. It is generally a contract that was skipped.
Other Credit Inquiries
This section will tell you what companies have inquired to a person’s credit. If you see other apartment complexes recently checking, it is likely the applicants were declined by them. Or maybe the tenants changed their mind and went somewhere else. If you are still considering renting to these people, you have to re-check your analysis to see what the other company might have seen and you have not. Or ask the tenants.
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