I have a former tenant that would like to buy a house. Currently this person has almost no credit history. He has never had a credit card and has never had a loan. He had a couple of outstanding gas and electric bills that are now paid. ...but he pretty much pays all his bills on time (never had a late rent payment).
The problem is his credit score shows up as "no score insuffiecient credit history". I'm thinking about doing a lease option with this person, and trying to help him improve his score. I have told him to go get a credit card with a $500 limit linked to his savings account to get started with some type of credit. However, I'm also wondering if there is a way I can submit something to the credit bureaus saying that he always paid rent on time to get something positive on his report. Does anybody know of a way that a landlord improve a tenants credit score?
There is one way you can build a credit score for him fast. You would add him to one of your credit cards. He would then inherit your credit score in 30 to 60 days. You would not let him have a card, this is just to build credit where there is none. After he qualifies and secures a loan you would then remove him from your credit card.
There are companies that pay people to do this for others with low credit or no credit to help increase their scores. The best and fastest way to give someone credit. Building his own will take time. I used this when I was in the mortgage business to help build credit for the buyer. It is then up to him to keep his the good credit rating from then on.
I'm in the same situation, just tell him to go to a lender that does MANUAL UNDERWRITING (at least I think that's the term). Everybody wants computers to do their job for them instead of having to put forth a bit of effort.
A friend of mine was in a similar situation a couple of years ago. He had about $1.8MM (that's million) in stocks/bonds etc, but mostly in retirement type accounts, plus another $1.5MM in real estate plus a couple of boats etc. But he had no credit and wanted to buy a $600K lakeside house, with 30% down.
He finally called a mortgage broker who ended up placing the loan with a lender that had already told him NO. Go figure!
The pay rent - build credit site might help your former tenant get credit for timely rent payments.
The delinquent utility payments will take some time to clear, though.
I know this is a old post but if anyone knows someone in a similar situation I can help them. I would just need basic information, a breif background, and then Ill work with that person on coaching them into homeownership. This is not a service that I offer so is free of charge to those who need the help.
The importance of a good credit score can never be understated. Whether you want a loan with low interest and large amount, a gold or platinum credit card, mortgage at good terms, car loan at cheaper rates or simply have a good financial credibility -- none of it can be achieved without having a good credit score.these are few tips:
1. Check your credit report regularly
2. Get rid of those extra credit cards
3. Repay on time
4. Keep your debt to balance ratio low
5. Report emergency situations to the credit card company
Be careful about getting rid of credit cards if you have had them for a while. Getting rid of an older card will impact your length of credit history. Better to keep older cards and not use them.
you can report the rent payments to the bureau for the tenant. contact each bureau and find out what their current requirements are for doing so. btw i have to say that many investors leave money (big money) on the table because they dont learn how to help people improve their credit. if more landlords knew how they could make big money from this type of situation. if only....