Landlord’s Guide to Renting to Someone with Bad Credit

Wednesday, June 26, 2019, 6:00 AM | Leave Comment

Unlike property management firms, an individual property owner can adjust his terms as much as he wants.

In most instances, landlords treat their tenants as people and not credit report numbers. Of course, a credit report has the ability to tell you which potential tenant is a bad credit risk.

Low credit is 300-629. However, in extenuating circumstances, an individual landlord has the option to ignore a bad credit rating.

Here is a guide that will help you to handle people with bad credit:

Landlord's Guide to Renting to Someone with Bad Credit 1

  • Ask for Proof of Funds

    When you check a prospective tenant’s bank statement, you will see whether he or she has money to pay rent. When you look at the income, you will not get a clear picture of the person’s finances. When you look at the person’s bank statement, you can determine his ability to cover rent.

  • Ask for Past Rent Receipts

    Is the person currently renting? You should ask for proof by requesting rent receipts. When you do this, you will find out whether the client can pay rent on time. If you need to, you should contact the previous landlord to ask some pertinent questions: is he a good tenant? Did he pay rent on time?

    If the client has been evicted, you should not consider him as a potential tenant. If a tenant cannot provide proof, he is a risk.

  • Ask for Pay Stubs

    If you come across a client with a bad credit score, you should find out more about his income. If the person has a steady job with a steady income, you might want to consider them. Most people spend about thirty percent of their income and you should consider this.

    Asking for recent pay stubs is the best way to confirm that the person is actually earning an income. Take it a step further and call his employer to find out the probability of ongoing employment. If the person has a bad credit but a high income, it would be a good idea to consider him.

  • Ask Why the Credit Score Is Bad

    A potential client might let you know about his bad credit even before you check for yourself. Instead of dismissing this person right off the bat, you should ask for reasons for the bad credit. In some cases, people might have a bad score because of a short sale or foreclosure.

    A potential tenant might also be a victim of identity theft or his report might have unreported errors. Bad credit might be the result of a number of things.

  • Ask for More

    When asking for loans, people with a bad credit score pay higher rates of interest because they are more likely to default on them. Following the same logic, you should ask a potential client for two months of two months of security payment instead of one. Such tenants will have no problem with this arrangement – they just want a place to live.

    If you know a person with bad credit and cannot find an apartment, you should convince him to get it now from online locators. Make sure that you remain within the rent ceilings of your neighborhood.

  • Ask for a Co-signer

    Landlord's Guide to Renting to Someone with Bad Credit 2

    The person with bad credit should ask an individual with good credit to co-sign his lease. Make sure that you check the co-signer’s credit just as you would a tenant’s credit. Ask the co-signer for an income and bank statement to verify his source of income.

  • Shorten the Lease Term

    When dealing with a tenant who has bad credit, you should reduce the term of the lease. For instance, if your normal lease length is a year, you can adjust it to six or three months. This allows you to close the tenancy period early enough if the tenant defaults on payments.

  • Ask for Direct Payment

    Make sure that you choose an applicant with a reliable bank account and income. Doing so allows you to ask him for direct debits to ensure that you receive rent on time.

Conclusion

As an individual landlord, you can be flexible with your rules when accepting applicants. With the above strategies, you can now start accepting persons with low credit ratings by considering incomes and past rent receipts.

Throw us a like at Facebook.com/doable.finance


Post a Comment on Content of the Article

 

This is not a billboard for your advertisement. Make comments on the content else your comments would be deleted promptly.

CommentLuv badge