Credit Score 510, any good?

Question

Credit Score 510,  any good?

I subscribed to the 'SmartMoves' by TransUnion that is promoted by BiggerPockets.......

I have a buyer!

Now that I am looking at their history I am puzzled.  Now this fella makes good money, has a union job at General Motors, been there for a good long time...   I would love to have this job!  Paid benefits, medical, etc.

BUT... as I look at this report I am puzzled how you can default on 31K for this and 17K for that or 11K for another, and all of the reports are saying 'writeoff or mumbo jumbo'...  I am puzzled.  It is not like there is a bad response from the folks that are owed money.  They just simply stated 'wewroteitoff' (some abbreviated stuff but means the same)..  I am wondering how they stay in business.

In the end:  SmartMoves recommended that I 'ACCEPT'.  And I appreciate the service as they know more than I do, but reading the details has me wondering how do you get away with owing 100K plus without paying and NOT be in jail/ prison or otherwise..

So back to my initial question:  Is 510 any good?

Always appreciate everybody's help here.  Thank you so much!

Jay Hinrichs · Answer

@Anthony Newbold  the reason he is not in jail is because we no longer have debtors prison... our debtors prison is now credit card debt and other consumer debt that people voluntarily get into .

Katie Rogers · Answer

"I hate to say it but my experience has been that bad credit is almost universal with renters."  How is that even possible given the number of renters relative to homeowners?  75% of residents in my town are renters.  I am pretty sure most of them do not have bad credit.  Is there possibly some reason your units attract this sort of renter?

Steve Kordish · Answer

Maybe better situation than me, I have 740+ score, $200K+ cash but quit my job 10 months ago. ;{

Katie Rogers · Answer

Well, it is hard for renters to qualify for a loan when the median price of a house is 18 times the median wage.  With our low inventory, even those who do qualify have a difficult time finding an acceptable house.  The million dollar price tag certainly does not come with million dollar quality in my town.

Anthony Newbold · Answer

Katie,

Thank you so much for your response.  I am like you and surprised at the level of delinquencies and poor credit score ratings that I am finding out about.

As for your town, WOW, you mention 75% of the residents in your town don't qualify for loans and remain renters without the ability to purchase a home.

I am not having to deal with that here, but was curious about what a 510 number meant.  It sounds like I should move on and let these folks rent and not take the chance on selling my home to them.

Thank you so much, and while this score (510) is bad, I'm not sure that it's universal with all renters.

Anthony

Anthony Newbold · Answer

I agree.  After reading the reports it looks like he's bought a bunch of luxury's and not paid for them while maintaining a good income.  I did not see any medical or student loans stuff.  At 20% down I might take the chance.  Interesting, yes, this would be a good introduction for declining the application unless of course 20% down were to occur.

Curtis Bidwell · Answer

@Anthony Newbold there's always a way to make it work.  In this case it would be a VERY SUBSTANTIAL down payment. You didn't say what the price point was, but 20% down would generally be adequate skin in the game and enough to cover repairs if you end up getting it back.

Charlie Fitzgerald · Answer

When a creditor writes off a debt, they are indicating that the debt is no longer collectible by their efforts and it generally is sold to a collection agency for pennies on the dollar.  They take a loss for the "bad debt" on their balance sheet.  Tis offsets their taxes at the corporate level as they had a loss in this case.

As far as doing a seller financing with an individual that clearly has a history off not paying his debt...why would you entertain that?  Why not do the same thing with someone that has a history of paying their debt and is a better risk to complete the transaction with you?  I would not consider this person a viable candidate for a seller financed transaction on any of my properties. I encourage you not to either.  The likelihood is that he is going to not perform, trash your property (what's he got to lose?), and after spending thousands to get him out and the property ready for the next person, you'll be far worse off than just waiting until you find a great candidate for this transaction.  That's my $0.05 worth.

Fred Heller · Answer

I hate to say it but my experience has been that bad credit is almost universal with renters.

The biggest issues I see that run someone's finances off the rails are a) divorce, b) student loans, and c) medical.

Out of the couple of hundred potential tenants I've dealt with the last couple of years, I can count on two fingers the ones who had credit scores of 700+.

Anthony Newbold · Answer

Selling on Contract:  Seller Financing:  ...  just doing the same for another that someone did for us many years ago.

Credit Score 510, any good?

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