Saint Cloud, MN · Member since 2017 · 31 posts · 3 votes
When screening your tenants are you ever surprised by the amount of debt they have on the credit report. One possible tenant has $24,000 in credit card debt. I know most people live paycheck to paycheck and spend more than they make. Report shows they pay there bills on time so not to worried about this tenant, but they do own there own business. not sure if that would be a red flag for any one else.
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
8y
@Patrick C. Do they have a decent credit score? Any delinquent accounts? If yes and no then I would not reject them for that. They actually have a business that you could put a lien against should they not meet their obligations with.
High credit card debt and owning their own business may mean the business is teetering on the edge. Self employed applicants are above average risk and require considerably more due diligence than any applicant with a W2. It is not so much that the business will fail but rather when the business owes creditors the landlord will get stiffed.
I generally pass rather than waste time screening. They are usually better off applying to rent from a corporate landlord.
Catskill, NY · Member since 2018 · 636 posts · 668 votes
8y
I'm not a business owner, but I feel like $24000 in CC debt is a lot for a small business to have. Did they recently make a large purchase and use the card(s) for points/cashback? If not, like already stated, it seems as if they may be using the CC to "float" their business. Did you verify income from tax returns?
It's a little odd that they've been paying their bills on time, yet their score is so low. It's probably because their utilization rate is so high, though.
Saint Cloud, MN · Member since 2017 · 31 posts · 3 votes
8y
I did not request tax returns(might have to since this is self employed) , I did ask for paycheck for proof. sent me screen shot showing $8,000 deposit, each month into business account, and $8,000 gets taken out each month.
*almost wanted to tell him that dosnt mean he's making 8k, means he has 8k in sales/services. dosnt show margin or anything....