I am about to make some decisions about our first rental property. I have a possible tenant, but have concerns after looking at the credit report. This is a husband/wife, with the husband being the sole earner. he qualifies financially, and has nothing bad on his report. His wife, however, has a number of collection reports over the last 2-3 years. Most are for small amounts from CC debt, utility companies, etc.
How does one decide? I would like to contact the prior landlords. they have lived in apartments. Do I just call the rental office?
If you can get a good reference from their previous landlord(s), then I would not worry about her credit report. Just call the rental office, they should be able to help you.
If the husband is going to be the one handling the payments, has a qualifying salary and clean report then I wouldn't care much about the wife. I'd definitely contact their previous landlords like you said you would.
If the husband qualifies, as you say he does, and he makes three times the amount of the rent, then I would accept him. You always want to rent to tenant(s) that are Collectible. Or get a Co-signer. However, if this guy makes at least 3 times the amount of rent, then I'd go for him.
Definitely contact previous landlords. I would hesitate about this, because clearly the wife's financial habits could eventually impact the husband's ability to pay rent.
I see a lot of collection accounts when I pull credit reports, but I take into consideration the type of accounts in collections. For instance, I'm more accepting/lenient when it's a medical bill in collections because those type of expenses are typically unexpected and can be very overwhelming for many people.
However, I'm more cautious with other types of collection accounts, like utility accounts (can they even get the utilities turned on in their name?), credit cards (shows poor money management), auto loans (if they won't pay their car bill, knowing that the car can be easily repossessed, then I'm less confident they'll pay their rent), etc.
As for contacting the prior landlord when it's an apartment complex, you'll need to contact the rental office. In my experience, they will usually require something in writing from the applicant authorizing them to release this information.
I rarely have any luck getting anything useful from rental offices of apartment complexes.
They rarely have personal contacts with the renters and really can't tell you if they are friendly or PIA, along that line. They may be able to tell you if they have been late on rent, but some of them won't, and very few can tell me if the tenants left the apartment in good conditions after they moved out, they don't know.
What doesn't make sense to me is that she has a credit report issue from utilities, but he doesn't. I would want an explanation of that.
Why accept a tenant with collections when there are tenants out there without collections on their record? Collections means that they have stiffed one or more of their creditors in the past; you could be next. I agree with the comments about medical debt but otherwise I would simply say, next!
Her record could be explained that maybe she struggled financially before she met him. Perhaps she was a single mom who was struggling to make ends meet. My advice would be not to worry too much about it, just make sure to have first last and security, take time stamped video and photos of unit before move in, have tenants sign off that house is in great condition, if it is. Then call previous landlord, and use the property appraiser website to make sure that the previous "landlord" actually owns previous property.
My rental applications have a sentence to the effect that they acknowledge and give approval for me to run a background check:
"I (applicant) recognize that as a part of your procedure for processing my application, an investigative consumer/credit/criminal report may be prepared whereby information is obtained through personal interviews with others with whom I may be acquainted, which I authorize hereby."
When I've had to contact apartment complexes, they require I send a copy of the signed application to them. Often it's similar when verifying employment.
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