Bad Credit does not = bad Tenant, just saying... (Austin, Waco: to rent, insurance)

[A-Tex]

Originally Posted by radiolibre99

And just because you own property doesn't mean you get to fundamentally do what you want and that every decision you make is in your rational self interest so it shouldn't be scrutinized.

Actually, it does. My property. My money. My criteria. God bless America. We can afford to be particular about who we entrust our sizable investment to.

There are folks who are willing to accept bad risk tenants and all the headaches that come with them. They can have them and you can chose to do business with them. That's their criteria and we have ours.

Or perhaps you can go out and buy your own property and make your own rules.

[A-Tex]

Originally Posted by MrCurmudgeon

Having no FICO score is much better than having a bad FICO score.

This. They are two entirely different things.

[cp102]

Sorry but I have to pay property taxes, insurance, upkeep , and anything that could go wrong like air conditioning breaking down. I can't afford this if my tenant doesn't pay his rent. So I use the FICO score , people who care about their credit will keep their score higher. Medical bills is one thing but credit card debt is another. I pay $5600 for property tax on one property, 1200 for insurance that 6800 a year before any repairs, etc. So yes I am particular. My rentals are newer in a really nice community, the HOA is active so I want to be sure the tenant will take care of the outside too.

Anyway good luck with your apartment hunting.

[austin-steve]

Originally Posted by radiolibre99

Let me put this into words that you can probably understand:

I am specifically talking about the FICO score...
Lenders and landlords are relying too heavily on scoring factors alone. As I said earlier, the software doesn't take into consideration consideration a person’s basic character or allowance for the fact that a person can change their lives and their behaviors. ...

I am not saying you can't use the credit report to evaluate risk but should it be the over-determinant factor? No.

And just because you own property doesn't mean you get to fundamentally do what you want and that every decision you make is in your rational self interest so it shouldn't be scrutinized.

Well, there are some things you apparently don't know about housing laws. Anyone in business as a landlord must abide by Fair Housing laws. The only defense to a "HUD Complaint" is proof that all applicants are evaluated and treated the same. The only way to treat everyone the same is to have a emotionless, non-subjective scoring system. FICO score is an accepted component of such a risk evaluation system because, as imperfect as it might be, it's equally imperfect for everyone regardless of "character" (age, race, religion, familial status, sexual orientation, etc). It's just a number based on whether the individual handles money well or not, period.

I've had two discrimination (HUD) complaints filed against me. In the 1990s and again in the early 2000s. The HUD investigator came into my office, interrogated me, went through my files, wanted me to show proof that I also evicted whites, that I had also declined applications of whites. And, it was clear to me, this investigator was looking for any thin thread to hang a case on. In each case, because there existed a systemized set of scoring criteria, and no evidence that any individual was ever treated any differently than any other, case was dismissed both times.

Let's say instead if I would have said about an unqualified applicant that I accepted "Oh, old miss Johnson. She's a widow and, poor thing, she's so sweet, she just had a rough time after her husband's death and I felt sorry for her so I cut her some slack". That would make me guilty of discrimination unless I cut everyone equal "slack".

Or, to the HUD investigator, "oh, that young couple! Yes they too hit a rough patch, with the new baby and all, but I could tell by talking to them they were good honest people so I decided to give them a chance".

This is not only a bad way to evaluate people, it's actually illegal. It creates what the "government" calls a disparate effect (unintentional discrimination) even if no intent to discriminate is proven. That is, if someone in a protected class complains and it's shown that they, even just that once, were not afforded the same subjective (unquantifiable) considerations as others (the same ones you're saying landlords should use), it's a HUD violation, which is a MAJOR business risk exposure with major fines, and not one any prudent landlord is wiling to take.

A scoring system applied equally to all is the only "bullet proof vest" that a landlord, mortgage lender or any credit company can wear to remain 100% within the law. That's why FICO exists. To prevent "red lining" as well as predatory lending where some people pay higher interest than others for no apparent reason.

Your ridiculous argument is that business owners, lenders and landlords should just "shoot from the hip" and make decisions based on people's "character". That would make you the fierce proponent of something that is the opposite of "smart" or "legal". OK?

[radiolibre99]

Writing a longer post doesnt give your points anymore validity especially since you're ascribing to me solutions I've never advovated. My point was that you think that you're rationally evaluating risk using a tool that ive pointed out has several flaws. Not just little stuff that can be improved but major systemic errors. Yet, when approached by this the reaction is that while yes it's flawed, it's the best tools you guys have at your disposal. That to me is running on narrative not reason. I think the FICO system is unnecessary, unfair, a conflict of interest, punitive, and affects people's lives in a negative way. Yet, in light of all this it's basically just a tool to protect your assets and make value judgements. It's an algorithm, a highly flawed one that has had many criticisms lobbied against it but still you guys rationalize it because people with gobs of money rely on it. That's what makes for a valid argument? When people risk millions upon billions everything they're doing is rational and putting that under scrutinity is going against logic? No my friend, it's actually very revealing that many of you said when you own your property you'll decide what to do. He who has the gold....

[Trainwreck20]

I have no rental property, but:

He who has the gold...

should actually read:

He who takes the risks....

And yes, his post is longer, but contains a significant statement as to why FICO scores are used - you can't be sued for using it, essentially, and you could possibly be sued for many of the other methods of evaluating a potential tenant that are mentioned in this thread. If I was a landlord, I would not want to know if my tenants were black, white, straight, gay, Jewish, Christian, etc. Digging into the specifics of an applicants life may LOOK like you are basing a decision on anything you 'dig up'.

If I was a landlord and was so inclined to consider lower FICO scores, the lease would require larger deposit(s) and eviction proceedings would probably be triggered as soon as legally possibly if payments fall behind.

[austin-steve]

Originally Posted by radiolibre99

...
I think the FICO system is unnecessary, unfair, a conflict of interest, punitive, and affects people's lives in a negative way.
...

Only those who don't pay their bills on time.

[A-Tex]

Originally Posted by singing_in_the_rain

Your kind of thinking is the slow death of this country.

It might be your money, maybe.
You do not own your property, try not paying taxes.
There is no god, have you seen it?

Clearly you have no understanding of how property rights, taxation and government work.

[radiolibre99]

Trainwreck, you take a risk with any tenant. If you can't handle that you probably shouldn't be in that business. You should be able to foresee the risks and plan accordingly, that should be personal accountability, no? The rest of your argument makes absolutely no sense.
Using the FICO system which is fundamentally systemically flawed, an algorithm that only takes into account certain factors and not others isn't the best measure no matter how many times you slice it. Using it as a protective measure from getting sued is not a point to concede that the credit scoring system itself isnt flawed. Everything you guys say is convinient to you and your interests yet you guys couch it as though it's a rational self interest, yet any notions to the contrary is somehow a failure of personal responsibility. I find that too convinient.

[radiolibre99]

Originally Posted by A-Tex

Clearly you have no understanding of how property rights, taxation and government work from an owners perspective.

Fixed for clarity. You guys seem to defer that what you guys have to deal with and what you use to protect your assets is the default way of truly understanding this issue. It's not.