Applicants With No Credit

If you’re a landlord and your properties are mid- to high-end, you probable run credit checks on your applicants, as you should!

With my lower income properties, I don’t normally do this, as many of my tenants have never established a credit history … they pay cash for everything. This is unbelievable to many, but makes a lot of sense to some people. They’ve decided they’ll never buy anything until they have the money to purchase! What a novel idea, right? And not a bad one, at that! Others who have had credit in the past have totally trashed it … unpaid bills and credit cards, etc.

But that scenario isn’t limited to lower income folks, believe me. And so we get back to the issue of credit checks on the mid- to higher-income applicants. When you run someone’s credit (I use National Tenant Network — they’re excellent) and it comes back as non-existent, you’ll need to check on a few issues:

  1. Did they record their Social Security number correctly on the app? Have them repeat it back to you for verification. If that can’t be done, raise the red flag!
  2. Maybe they really don’t have ANY credit that’s been established. This is certainly possible, especially with young people who have not used credit cards or had utility bills in their names.
  3. That person may not be included in that reporting bureau’s files. There are three major bureaus — Trans Union, Experian and Equifax. Make sure you recheck that.
  4. Did they mention any credit cards on the application? If so, and there’s no report that comes back, they’re lying. If you have a credit card, you have a credit history.  Recheck the driver’s license, SS number, etc. Something’s not right … get ready to raise that red flag.

Many people present well, and aren’t what they appear. That’s why the application process is another tool we use to help determine qualifications.

On the other hand, I’ve rented places to people with no credit trail, and I’m not afraid to do that. I talk with the employer, verify income, talk with the previous landlord, do a drive-by of the previous residence to check the neighborhood and condition of the property, and assess the applicant personally. And from there, if there are no other parameters to lean on, I go with my gut.

Happy screening!

 

 

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