RentGrow, a national tenant screening company sends out monthly newsletters and reports trends they are seeing. Although they are reporting national trends, I have found them to be fairly relevant to the Boise market and what we at First Rate Property Management have been seeing. Click here to view RentGrow’s entire May newsletter.
We have seen an increase in bankruptcies as well. First Rate Property Management will not accept any tenant with an open bankruptcy. We did however, make changes to our rental criteria to make exceptions for would-be tenants who have lost their home due to a foreclosure or filed bankruptcy due to a foreclosure. Depending on the circumstance, this can be difficult to show, but we do make the effort.
Thin to no Credit
About two years ago we changed how we looked at credit reports. We use to look and analyze the number of accounts and count and score the number of late pays, etc. Now we simply input the credit score into our decision model. So we are not penalizing our applicants for thin credit, as long as it’s good. When things go bad, we do review our screening criteria and I would have to agree, those with very little credit do pose a risk. Since the Boise rental market appears to be improving, this is probably one the first areas that we will change to tighten our rental criteria.
We have noticed a lot of bad credit. As I have said before, I don’t know if these bad credit scores are a sign of the times or an indicator of how unimportant credit is to the younger generation. It’s been amazing to see.
This month’s RentGrow newsletter didn’t address identity theft, but this too is a trend we’ve been seeing. More and more applicants are blaming their poor credit due to identity theft. We are willing to work with tenants who have bad credit due to identity theft, but the documentation has to be impeccable, so we are actually unable to help very many applicants in this situation. However, it has opened my eyes to the damage a stolen identity can cause and how much time and frustration it appears to take to get it corrected. It’s devastating.
Many years ago we actually forgave applicants for medical debt. However, after being burned a couple of times, we no longer allow it. The problem is that the creditor can and probably will at some point, get a judgment and garnish wages. The garnishment could be enough where they no longer can afford to pay rent. We’ve seen this scenario enough times that we realize this is a risk we no longer wanted to take.
Speaking of medical bills, I’ve been blessed to be relatively healthy all my life. Earlier this year I had to run some tests, so I’ve been dealing with medical bills and insurance. What a screwed up system. For one, the costs are absolutely ridiculous. Two, their billing is horrible. And three, between the insurance company and the service providers, it takes months to get it all sorted out. Oh, thank God the government is taking it over. I’m sure it will be much easier then. Right?
Soon, we will actually have a webpage that our applicants can go to and see where FRPM is at on their application. So it will show the application submitted, when it passes or is denied for credit, criminal background check, prior landlord references, and employment/income verification. Additionally, it will list any documents that we still need to compete their application such as payroll stubs and taxes. We are hoping that they will be able to upload these documents to us. This will eliminate the multiple phone calls we get from prospective tenants looking for an update on their application and it will drive more traffic to our website, which will improve our search engine optimization.
Tenant screening is ever changing. As new risks and trends are identified, the Landlord’s screening criteria probably needs to be tweaked too. Obviously market conditions have a role. If you have five applications per property, it’s time to tighten up your criteria. When you are denying a majority of your applications, like we were last year, it’s probably time to loosen up the criteria a bit.
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