Rental Property Investor · Culver City, CA · Member since 2014 · 222 posts · 79 votes
I asked my PM to provide actual credit scores instead of just the credit history. I have a hard time deciphering various delinquent accounts etc.. and just want a Credit Score to evaluate a tenant.
The PM reply is below. Any thoughts about this?
"We chose not to get FICO credit scores when we employed a credit bureau and use a debt to credit ratio. The cost with FICO scores is much higher. My former Broker did not use FICO scores. We would have to increase our application fees and sign a new agreement with the credit bureau. None of our other owners have required FICO scores. I would estimate application fees increasing from $35 per adult to $55-$60. I don’t wish to be difficult, but I’m not sure FICO scores are feasible for these reasons. Our application fees need to be in line with those other property management companies charge."
@Cara Lonsdale Thanks for the input, yes, I do want the credit history, but I have a hard time objectively determining the credit worthiness of the applicant hearing a list of the credit information over the phone from the property manager.
If there is a list of items and they have a late payment from a few years ago and a cable collection, then some medical collection from 5 years ago, but everything else is good now.
I have a hard time judging that applicant objectively. I'm just asking for a FICO score that every lender uses to assess the creditworthiness of a borrower.
Like I said , there are good things about the PM for sure, but I feel there are some things which make things harder for me and also more expensive.
As a landlord, ALL you should care about is what is on that credit report that will get in the way of them paying your rent.
If they have late pays on a credit card that has a $15K balance, that may be a concern. If they have delinquent status on medical bills over $20K, that is a red flag. Huge car payment or two?
If they have some late pays 6 months ago on an account that has since been paid, that is nothing.
If they have an eviciton on their credit, no matter how long ago it was, that should be a huge red flag.
So, I guess what I am trying to convey is that YOU need to come up with the criteria that is most important to you. Keep in mind that YOU are NOT a lender. A lender looks at different criteria that you should be looking at. Equally important to note is that many of the tenants that may apply are renting because they can't buy. That 30 day late pay on their credit may be holding them up from obtaining a loan, but it shouldn't be an issue for them to rent.
FICO won't always tell you as a landlord what you want in order to compare tenants. It is built for lending, not for leasing.
So it sounds like you don't like their process in general, and you may be missing out on good tenants because of their inefficiencies? I was never as involved in the process as you seem to be, but that could be because of the reasons mentioned above? It sounds like you should start looking for a PM that more aligns with your processes. Maybe start by getting local references and ask about their placement processes.
Here in Georgia we have to go in order of applications received. Because of all of the desrimination that used to and is still going on....It's to assure that applicants aren't chosen by preferred race.
In california it's such a free for all. Landlords will get 30 applications at an open house and then they can just pick the one they like best. I always find it very difficult when renting on the westcoast.
I do not use property management but I would never take a tenant whom is just starting out. To me that is too risky. Unless you are desperate for tenants perhaps you could give your PM strict guidelines for acceptance so that they can quickly reject any potential applicants whom do not meet your criteria. Then they can more quickly move onto other applicants. Criteria that comes to mind is a prior landlord good reference, no evictions, a minimum Income requirement , etc...
@Michaela G. Thanks, that is my question about Florida, what is the law regarding taking applications. I want to make sure my PMs understanding of the law is correct.
I use a service called cozy for applications and it gives me both.
I think one of the bigger reasons for pushback from the PM is the fact that whatever system they use only provides one or he other and changing their workflow is something they just don’t want to do. There are always outside services for you to get the info you require.
That said I care about income more than score. Someone with high income most likely doesn’t want to be kicked out of their apartment but might not care so much to make the credit card payments on that awesome new tv they bought. Bills that hurt credit are much easier to skip out on for a lot of people. Most don’t want an eviction.
That said depending on credit and history I do month to month leases and double the security deposit. Some clauses that allow me to keep for non payment, ect and much easier to get someone out.
@Michaela G. Thanks, that is my question about Florida, what is the law regarding taking applications. I want to make sure my PMs understanding of the law is correct.
The properties are in Florida.
I'm bringing up Georgia, because some parts of Northern FLorida are also considered The South and thus had the same problems, that Georgia had with their Jim Crowe laws.
You never mentioned where in Florida (but I wouldn't know anyway)