Bad Credit does not = bad Tenant, just saying... (Austin, Liberty: real estate, mortgage)

[austin-steve]

Originally Posted by radiolibre99

But doesn't the score itself count other factors that might not be considered relevant to landlords? This is where I defer to your experience. ...

This has been the fault in your argument all throughout this thread. Yes, everything is connected. The score is a result of behaviors. It just rolls those behaviors into a nutshell number. Eliminating the "score" doesn't eliminate the factors that determine the score, and those factors all tell a landlord something about the financial health and past behaviors of the prospective tenant.

What you're really saying, without knowing it, is that you don't care if landlords look at an applicant's credit report, you just object to landlords looking at the "bottom line" result of that credit report, which is the score. What's the difference?

When I see an 810 FICO in the top part of a credit report, I don't even need to see the rest because I know what's there and what isn't, automatically, just from seeing the 810. It's all stellar.

Same with 520 - I know that the report contains serious wreckage. It's the 580-640 scores where perhaps some story details might be helpful, but then a landlord is introducing subjectivity, which is risky. See my earlier example of HUD complaints.

[verybadgnome]

My first roommate for the first house I owned turned out to be a disaster. Turned out he couldn't pay his rent (only $400 including utils) and wanted to do work around the house in lieu of rent. He told me he could not do a full time job and had been turned down by SS for his back injury. Still he told a good sob story which he would use to buy time while he went from church to church asking for money. I really think in his mind he deserved special treatment because of all he had been through and all the crappy jobs he had to endure.

Next time I rent out I will use the best data available to screen applicants, but will listen to justifiable reasons as to why the data does not tell the whole story. Still people have to remember that the Austin market right now is very tight and that lessening the requirements for applicants does nothing to increase the supply of housing.

[Trainwreck20]

Originally Posted by singing_in_the_rain

And what they are doing with the system runs afoul in general. We cannot let these people
claim their riches this way. I am tired of it.

It is interesting that you assume all landlords are 'claiming riches' - my dad never got rich, that is for sure. Rent might cover mortgage and interest, but it almost never covered the damages that could be caused by that once-in-a-blue-moon occupant that totally lacked regard for the house/condo.

If I had kept my north Austin property and hired a property manager, I would have been one of the lucky landlords - buy a house <$100,000 (currently valued >$240,000) and rent it out currently for more than all the typical costs. Still, even now, at probably the presumptive peak of the rental market and 10 years later (with many years of lower rental rates), I would be pretty close to cash-neutral if someone trashed the house. Two months of missed payments or empty house, and I would be negative for the year.

The grail at the end is the appreciation (minus taxes, ofc).

[radiolibre99]

So much to address, ok here I go. I understand the confusion but I was really saying that relevant info should be taken into consideration but should not be the overall determinitive much less reliance on mostly the Fico score. If all it takes security deposit to avoid risk why can't all transactions be an ability to pay scenerio? Any tenant is a risk regardless of past history. It seems like it's relying too much on predictive analytics and it's overriding common sense. Bear with me while I figure this out:

I'm not trying to say that Fico is a scam or a conspiracy to keep victims down but that there could be some systemic issues we are not looking at. Landlords find it useful tool to avoid risk and benefits the relationship with several different players other than the consumer tenant. How will this affect millennial's if people under 30 rely less on the less on credit? In my experience the lenders are looking less and Fico scores and more on cash flow to see how one manages their monthly flow. How much money you make versus how much you spend. Another thing is medical bills are huge mess I don't even know why they factor? Hospitals regularly handoff invoices to agencies before the billing is even settled with insurance. It's so bad even Fico said theyll reduce the impact of medical debt on scores in their next update. Which brings up another question even Fico has to update their top-secret algorithm, no? I believe that takes up to two years if I'm not mistaken which means people still deal with the old inputs factored in. Let's not even touch the issues with credit reporting agencies. They sell debt on their spreadsheets to each other like crazy sitting in there lightly regulated offices. Damage is done once the debt is registered and Toughlove is administered on way to fixing it over time. After seven years it's taken off. Whether you pay or not becomes a matter of personal decision as the The damage is done not according to me but to FICO themselves. They don't reward people who pay off their items once collections reports them. Collection agencies have started side businesses where if you agree to a good deal with them they offer you a paid to delete option. Fico is promising to remedy this too! If someone closes their credit cards doesn't this also hurt your score? Am I not mistaken but doesn't fico ignore making timely rent payments? Serious question. These are just some of the things I'm thinking about when it comes to the whole system along with all the other things I addressed above.

Your thoughts.

[ATX Wahine]

Originally Posted by singing_in_the_rain

And what they are doing with the system runs afoul in general. We cannot let these people
claim their riches this way. I am tired of it.

Claim your own riches by working hard, saving cash, and buying your own house.

Problem>solution.

[riaelise]

That's why you BUY your own residence, not rent. You can obtain a mortgage with a 640 credit score, and probably a little lower with an FHA loan. While my credit is above that, I don't particularly care for being a renter. Renting has always been a jump off to ownership for me. I've probably rented no more than a year at a time, owned my first condo at 21. It was worth the effort to raise the downpayment.

[MrCurmudgeon]

Originally Posted by radiolibre99

So much to address, ok here I go. I understand the confusion but I was really saying that relevant info should be taken into consideration but should not be the overall determinitive much less reliance on mostly the Fico score. If all it takes security deposit to avoid risk why can't all transactions be an ability to pay scenerio? Any tenant is a risk regardless of past history. It seems like it's relying too much on predictive analytics and it's overriding common sense. Bear with me while I figure this out:

I'm not trying to say that Fico is a scam or a conspiracy to keep victims down but that there could be some systemic issues we are not looking at. Landlords find it useful tool to avoid risk and benefits the relationship with several different players other than the consumer tenant. How will this affect millennial's if people under 30 rely less on the less on credit? In my experience the lenders are looking less and Fico scores and more on cash flow to see how one manages their monthly flow. How much money you make versus how much you spend. Another thing is medical bills are huge mess I don't even know why they factor? Hospitals regularly handoff invoices to agencies before the billing is even settled with insurance. It's so bad even Fico said theyll reduce the impact of medical debt on scores in their next update. Which brings up another question even Fico has to update their top-secret algorithm, no? I believe that takes up to two years if I'm not mistaken which means people still deal with the old inputs factored in. Let's not even touch the issues with credit reporting agencies. They sell debt on their spreadsheets to each other like crazy sitting in there lightly regulated offices. Damage is done once the debt is registered and Toughlove is administered on way to fixing it over time. After seven years it's taken off. Whether you pay or not becomes a matter of personal decision as the The damage is done not according to me but to FICO themselves. They don't reward people who pay off their items once collections reports them. Collection agencies have started side businesses where if you agree to a good deal with them they offer you a paid to delete option. Fico is promising to remedy this too! If someone closes their credit cards doesn't this also hurt your score? Am I not mistaken but doesn't fico ignore making timely rent payments? Serious question. These are just some of the things I'm thinking about when it comes to the whole system along with all the other things I addressed above.

Your thoughts.

I think this is a fair question: have you ever been a landlord, or loaned someone a significant (five-figures plus) amount of money?

[freemkt]

Originally Posted by A-Tex

In a competitive rental marketplace, landlords can afford to select the very best tenant candidates. Quite frankly, someone with your credit history is not a good risk. Your credit score may also affect your employment and insurance prospects. The only way out of your situation is time and paying all of your debts in a timely manner. In the meantime, the only things that may help you is a cosigner or perhaps if you found an individual landlord willing to work with you.

Won't do a bit of good for someone with judgments that won't go away, if their trashed credit excludes them from jobs that pay enough to eliminate the old debt.

[freemkt]

Originally Posted by riaelise

That's why you BUY your own residence, not rent. You can obtain a mortgage with a 640 credit score, and probably a little lower with an FHA loan. While my credit is above that, I don't particularly care for being a renter. Renting has always been a jump off to ownership for me. I've probably rented no more than a year at a time, owned my first condo at 21. It was worth the effort to raise the downpayment.

If you're making $8 per hour you're not going to be in a position to BUY your own residence.

[freemkt]

Originally Posted by A-Tex

Because from a landlord's perspective, the next time you don't pay your bills then it might be to the landlord you're not paying. You have a history of not paying bills. That's all a landlord is going to look at when they're in a market where there are multiple applicants.

You are fortunate that you've never had your credit score affect your ability to find employment. You need to be aware that it it possible. Your credit score also affects your ability to get various types of insurance or the rates you pay. People who have poor credit histories are statistically worse risks for a lot of things.

If there's not enough money to pay everyone, I pay the rent first.

I once had to move due to foreclosure because the landlord did not pay the mortgage.

How come landlords can have bad credit and renters can't?