Which type of debt is the most crushing? (salaries, generations, solutions)
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I guess what I'm wondering is how people land in situations that cause them problems.
Do we have an issue with a lack of education on how to manage debt? I think that we might. I did hear people tell me to simply "avoid" credit cards when I was a young adult, but that is not a great strategy, because having NO CREDIT was a real problem for me passing credit checks.
In fact I would say that in regards to getting approval when needed, I had the hardest time of it, as a young adult with no credit. Even much later when I declared bankruptcy, my score actually went UP afterwards and I was immediately approved for a new credit card, and I have not been turned down for anything since.
(And before you jump on that, the bankruptcy was both necessary, and I hope a once in anyone's lifetime situation, escaping a crazy person who was a threat to my life and that of my kids, to make a long story short. It wasn't because I ran up the bills having a good time I couldn't afford.)
Point is, it didn't really hurt me that much. It's still on my record, hasn't aged off yet, but my score is in the 700s and I have not been denied for anything.
So when it came to my sons, as soon as they were allowed to, I got them secured student credit cards, so that they could start to build a credit score. By the point I released them into the wild, so to speak, they each had good credit to start out life with. What they do with that now, is up to them.
I really think that the credit scoring models are a bit messed up when a person who has debt, or even a bankruptcy on their record, has a better score than someone who has simply avoided all kinds of debt and credit altogether, but paid their bills for expenses on time and has stable employment.
Fortunately, I've noted that there are some newer programs cropping up that report positive info on credit reports that did not used to be factored in. Including some apartments and PM companies are now using a new thing to report positive payment info. That is a good change.
Generally I ask to see 3 or 3.5 times the rent as required income. However, this rarely tells the whole story regarding financial stability. What I almost always see on a credit report is roughly $700-$900 due monthly for various loans. And credit card debt which I don't need a calculate tells is $300 or $400 in interest payments alone.
Fortunately, I've noted that there are some newer programs cropping up that report positive info on credit reports that did not used to be factored in. Including some apartments and PM companies are now using a new thing to report positive payment info.
Not sure what new programs are being used by PM companies to screen applicants. I use: https://ntnonline.com/ which is one of the best. If an applicant had a collection agency come after them in the past and they took care of the debt this is shown on the report.
But most important for me as a landlord is the ability to **remove a renter within 30 days if they don't pay the rent or break their lease agreement. How a person spends their money is of course their business but at the same time if someone needs to "explain" why they can't pay on the 1st I don't know anything about that. All I know is I haven't been paid.
I tell them I've got my own bills and if I'm not paid within the next day or two I'll begin moving towards an eviction.
**I had a renter sign a lease in Oct. of 2019. However, June of 2020 I began to suspect his brother and family were also living in the property. But this renter was smart and knew the law. He claimed to have a disability which was covered under Fed. law and after owning rental property in San Francisco for many years I could see this might be trouble.
Fortunately, when a lease expires in AZ that's it. CDC moratorium or not tenants have to leave because it's not considered an eviction. Now, if a lease agreement rolls over to month to month then it becomes much more difficult to get renters out under the current moratorium.
I never complained about the brother and his family and went along with the charade they enjoyed "visiting." However, around August I told my tenant I was thinking about selling and wouldn't be renewing their lease. So they left peacefully.
Generally I ask to see 3 or 3.5 times the rent as required income. However, this rarely tells the whole story regarding financial stability. What I almost always see on a credit report is roughly $700-$900 due monthly for various loans. And credit card debt which I don't need a calculate tells is $300 or $400 in interest payments alone.
Fortunately, I've noted that there are some newer programs cropping up that report positive info on credit reports that did not used to be factored in. Including some apartments and PM companies are now using a new thing to report positive payment info.
Not sure what new programs are being used by PM companies to screen applicants. I use: https://ntnonline.com/ which is one of the best. If an applicant had a collection agency come after them in the past and they took care of the debt this is shown on the report.
But most important for me as a landlord is the ability to **remove a renter within 30 days if they don't pay the rent or break their lease agreement. How a person spends their money is of course their business but at the same time if someone needs to "explain" why they can't pay on the 1st I don't know anything about that. All I know is I haven't been paid.
I tell them I've got my own bills and if I'm not paid within the next day or two I'll begin moving towards an eviction.
**I had a renter sign a lease in Oct. of 2019. However, June of 2020 I began to suspect his brother and family were also living in the property. But this renter was smart and knew the law. He claimed to have a disability which was covered under Fed. law and after owning rental property in San Francisco for many years I could see this might be trouble.
Fortunately, when a lease expires in AZ that's it. CDC moratorium or not tenants have to leave because it's not considered an eviction. Now, if a lease agreement rolls over to month to month then it becomes much more difficult to get renters out under the current moratorium.
I never complained about the brother and his family and went along with the charade they enjoyed "visiting." However, around August I told my tenant I was thinking about selling and wouldn't be renewing their lease. So they left peacefully.
I'm not saying that there is a new way for PM companies to check credit reports of applicants.
I'm saying that there is a new thing I'm seeing a lot of the pros (apartment complexes and PM companies) advertising on their websites, that paying your rent on time will be reported to credit bureaus as a positive thing that will raise your credit score.
And I think that's good. I don't think that an 18 year old should have to get a car loan, OR a credit card, that maybe they don't want or need, in order to establish some kind of a credit score. If you never use credit of any kind, and you have NO credit history, it actually reflects worse on your score and ability to get credit, than if you've made a mess of your finances in some ways.
I understand that you want to put tenants out if they don't pay you. You've said that many times. At this point it's beginning to look like a weird flex on your part, and again, I don't think it's got anything to do with the subject of the thread.
I'm not saying that there is a new way for PM companies to check credit reports of applicants.
I'm saying that there is a new thing I'm seeing a lot of the pros (apartment complexes and PM companies) advertising on their websites, that paying your rent on time will be reported to credit bureaus as a positive thing that will raise your credit score.
And I think that's good. I don't think that an 18 year old should have to get a car loan, OR a credit card, that maybe they don't want or need, in order to establish some kind of a credit score. If you never use credit of any kind, and you have NO credit history, it actually reflects worse on your score and ability to get credit, than if you've made a mess of your finances in some ways.
I understand that you want to put tenants out if they don't pay you. You've said that many times. At this point it's beginning to look like a weird flex on your part, and again, I don't think it's got anything to do with the subject of the thread.
I often compare my property to similar listings on Zillow to find out what additional fees PM companies charge. I've not read anything like that and getting involved with a credit bureau on the behalf of a renter isn't advisable. Because I have multiply properties Network Tenant Screening allows me to run a full credit check. I once mentioned to a renter a $75 cell phone bill which she defaulted on that cost her credit score 50 points. However, I wasn't aware that I shouldn't discuss such things nor am I allowed to give an applicant or renter a copy of their report. If they want a copy they need to order their own. However, the Network Tenant Screening does allow a landlord/PM company to leave to comment about renters after they vacate.
I understand that you want to put tenants out if they don't pay you. You've said that many times. At this point it's beginning to look like a weird flex on your part,
I often compare my property to similar listings on Zillow to find out what additional fees PM companies charge. I've not read anything like that and getting involved with a credit bureau on the behalf of a renter isn't advisable. Because I have multiply properties Network Tenant Screening allows me to run a full credit check. I once mentioned to a renter a $75 cell phone bill which she defaulted on that cost her credit score 50 points. However, I wasn't aware that I shouldn't discuss such things nor am I allowed to give an applicant or renter a copy of their report. If they want a copy they need to order their own. However, the Network Tenant Screening does allow a landlord/PM company to leave to comment about renters after they vacate.
I understand that you want to put tenants out if they don't pay you. You've said that many times. At this point it's beginning to look like a weird flex on your part,
Whatever.
I did not mention fees.
You really are not understanding what I'm talking about, I guess. How would it be "getting involved with a credit bureau on behalf of a renter" in some inadvisable way, to participate in a program that reports positive payment info on their credit report??
I just went looking for it. If you do a Google search for "Bridge Credit Plus" you will see page after page of listings for apartments where they say that they report on time rent payments to credit bureaus so that it positively affects renters' credit. This is what I was seeing on listings for rentals in the East Valley region of the Phoenix metro, but I'm pretty sure that it's a thing that is available to PMs all over the country.
Maybe it's worth mentioning, too, that while I have personal experience with landlords, PMs and apartment leasing agent types, from my own life (when I was not a homeowner, which I have also been)...but more significantly, I am part of a team that does analytics for very large PM type clients. Not little private landlords or even some local Realtor managing a portfolio of single family homes, but like...massive companies that own millions of residential units, sometimes in multiple countries.
There are software and products that they make use of, that no one would even try to sell to someone at your level of operation.
[b]You really are not understanding what I'm talking about, I guess. How would it be "getting involved with a credit bureau on behalf of a renter" in some inadvisable way, to participate in a program that reports positive payment info on their credit report??
I just went looking for it. If you do a Google search for "Bridge Credit Plus" you will see page after page of listings for apartments where they say that they report on time rent payments to credit bureaus so that it positively affects renters' credit. This is what I was seeing on listings for rentals in the East Valley region of the Phoenix metro, but I'm pretty sure that it's a thing that is available to PMs all over the country.
Maybe it's worth mentioning, too, that while I have personal experience with landlords, PMs and apartment leasing agent types, from my own life (when I was not a homeowner, which I have also been)...but more significantly, I am part of a team that does analytics for very large PM type clients. Not little private landlords or even some local Realtor managing a portfolio of single family homes, but like...massive companies that own millions of residential units, sometimes in multiple countries.
There are software and products that they make use of, that no one would even try to sell to someone at your level of operation.
No, you did not mention fees. However, there is an area on Zillow (which is by far the most popular site to list rentals) where PM/landlord add additional info pertaining to listings. This is what I was referring to. A PM company might mention they add 1.5% each month as an additional service fee or note the owner pays the HOA dues. If a PM/landlord offering to help boost an applicants credit score by reporting on-time rent deposits is something which is gaining in popularity I've never seen it mentioned on Zillow.
“It's unlikely that timely rent payments will help obtain any of the major forms of credit – cards, mortgages, auto loans – without a lender willing to work with higher risk borrowers. Yet many landlords still look at the actual credit report along with the score. So, for prospective renters with some questionable 'established' credit and a favorable reported rental history, adding positive credit in this way could help their chances,†Paperno says.
If your future landlord reviews credit reports to determine whether you make payments on time and in full, then putting positive information on your credit report could benefit you.
“Unfortunately, however, other than in this specific example there really isn't much upside to paying for positive rental data,†Paperno concludes.
In other words it can't hurt and might help an applicant. However, if an applicants credit score is crap they still aren't getting approved esp. if the application is run through a PM company. The company or software the PM uses to run applications often has a credit score cut off point. Under that number and the application is usually rejected.
Me? It (applicants history of paying rent on time) would catch my eye. But like the PM company I would wait for a better applicant.
There are software and products that they make use of, that no one would even try to sell to someone at your level of operation.
The kind of renter I really am trying to talk about, are young people generally, or those who have simply avoided opening credit accounts at all because they prefer not to borrow money, but to buy what they can afford.
I actually am friends with a couple who are stably employed (a nurse and an IT guy for the City) who just do not believe in taking on debt. They have avoided car loans and credit cards and have simply saved up for whatever they wanted to buy. But doing so, they found themselves in their 30s, having always rented a home from the man's brother (so, no credit concerns, it's in the family)...wanting to get a mortgage, and having no credit.
No credit, scores WORSE than "bad" credit.
No matter what John the Landlord says he thinks when he looks at this and that, the SCORE will be worse, if there is no credit history.
When I am critical of how "things are" in America it's not only about me and my situation (*ahem*) it's often about other people in other situations. My sons, for instance, and other kids their age. I remember BEING their age. Jumping off into adulthood when you're very young has a lot of challenges. I don't think it's great that young people are too encouraged by various factors to take on debt that maybe they don't know how to even handle.
Student loan debt is bad enough.
But credit cards? Auto loans from sketchy subprime lenders?
So I LIKE the idea that Junior's first apartment might actually report positive payment info.
Junior isn't gonna be renting a house from you anyways. But this thread is not titled, "John's criteria for renting houses." It is titled, "Which kind of debt is most crushing."
So I'm interested in what could be done to make whatever forms of debt people find to be "crushing"...less so. And there is more to it than, "don't borrow to get a TV or a truck you can't afford."
By the by. Years ago when I had to declare bankruptcy myself, the lawyer told me that the two most common situations that people cite when claiming bankruptcy as individuals, are divorce and medical debt. When I sat in front of the judge, he pretty much just rubber stamped mine and sent me on my way. This is such a military heavy town that hearing that my ex had a mental break after getting out of the Army and the process of trying to extricate myself, when he wouldn't work and ran up debts in my name, caused all this financial ruin...well, I guess it's not that uncommon.
I think that periods of extreme trauma and difficulty like a divorce must fairly often mess with people's ability to stay in control of their finances. I never had such a hard time with it before or since.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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I was amazed to find that a friend is paying for a student loan with the balance still at $70,000, and that payment is twice as much as she and her husband's house payment. In fact one of her paychecks every month goes to the student loan, and that will last another 5 years before it's paid off. Even a 29% interest credit card is not as bad as that, considering that most wouldn't ever get that high a limit. The 2008 recession sub-prime home loans, however, had a more severe effect on many people who ended up homeless.
The kind of renter I really am trying to talk about, are young people generally, or those who have simply avoided opening credit accounts at all because they prefer not to borrow money, but to buy what they can afford.
I actually am friends with a couple who are stably employed (a nurse and an IT guy for the City) who just do not believe in taking on debt. They have avoided car loans and credit cards and have simply saved up for whatever they wanted to buy. But doing so, they found themselves in their 30s, having always rented a home from the man's brother (so, no credit concerns, it's in the family)...wanting to get a mortgage, and having no credit.
No credit, scores WORSE than "bad" credit.
No matter what John the Landlord says he thinks when he looks at this and that, the SCORE will be worse, if there is no credit history.
When I am critical of how "things are" in America it's not only about me and my situation (*ahem*) it's often about other people in other situations. My sons, for instance, and other kids their age. I remember BEING their age. Jumping off into adulthood when you're very young has a lot of challenges. I don't think it's great that young people are too encouraged by various factors to take on debt that maybe they don't know how to even handle.
Student loan debt is bad enough.
But credit cards? Auto loans from sketchy subprime lenders?
So I LIKE the idea that Junior's first apartment might actually report positive payment info.
Junior isn't gonna be renting a house from you anyways. But this thread is not titled, "John's criteria for renting houses." It is titled, "Which kind of debt is most crushing."
So I'm interested in what could be done to make whatever forms of debt people find to be "crushing"...less so. And there is more to it than, "don't borrow to get a TV or a truck you can't afford."
By the by. Years ago when I had to declare bankruptcy myself, the lawyer told me that the two most common situations that people cite when claiming bankruptcy as individuals, are divorce and medical debt. When I sat in front of the judge, he pretty much just rubber stamped mine and sent me on my way. This is such a military heavy town that hearing that my ex had a mental break after getting out of the Army and the process of trying to extricate myself, when he wouldn't work and ran up debts in my name, caused all this financial ruin...well, I guess it's not that uncommon.
I think that periods of extreme trauma and difficulty like a divorce must fairly often mess with people's ability to stay in control of their finances. I never had such a hard time with it before or since.
Yes, but most adults today have at least one credit card if for no other reason than to set up an internet/cable connection, a cell phone plan or whatnot.
23 years of owning rental properties and only once did an applicant apply without a credit history. A woman maybe 22 or 23 just out from the military.
I've had college kids from time to time ask if I accept a co-sign on the lease. Ans: no. So, that's the end of that. Maybe they had credit. Maybe they didn't. Never asked.
No credit, scores WORSE than "bad" credit.
Having no credit or bad credit can complicate your financial life. In general, having no credit is better than having bad credit. But either unestablished credit or a negative credit report can make it difficult to qualify for loans or credit cards. https://www.forbes.com/advisor/credi...an-bad-credit/
No matter what John the Landlord says he thinks when he looks at this and that, the SCORE will be worse, if there is no credit history.
No credit means you don't have any credit record. ... If you have no credit, it means creditors don't have a good way to predict how likely you are to pay your bills as agreed. It's not the same as bad credit, which means you have a credit history with major blemishes. https://www.nerdwallet.com/article/f...dit-difference
Now, its true someone with no credit history will come back with a rock bottom score (300?) However, there can be legit reasons why a person doesn't have a credit history. Ex. a foreign national moving to the US for school or work. Or an **American like me who lived abroad.
On the other hand an applicant comes back with a 510 credit score...sorry but that's dead in the water.
**I had a BOA card but moved the card over to my parents mailing address before leaving the States. I could have put down a foreign address and still kept the card. However, I was told over time this would over time hurt my credit history. Best to use a US address.
Junior isn't gonna be renting a house from you anyways. But this thread is not titled, "John's criteria for renting houses." It is titled, "Which kind of debt is most crushing."
The reason I brought up credit card and loan debt is because while medical or legal might consider most financially crushing.... I rarely see this on a credit report. What I often find are people who owe a lot money on their credit cards along with various loans.
So I'm interested in what could be done to make whatever forms of debt people find to be "crushing"...less so. And there is more to it than, "don't borrow to get a TV or a truck you can't afford."
It's not difficult: buy what you can reasonably afford and don't over-extend yourself too far. I mean how the hell does someone rack up 10-15 grand in credit card debt? You think after five thousand they'd consider cutting back. Then there's the loan on an expensive vehicle or expensive given their income. You do the math and quickly realize such people aren't in a position to save a dime.
Again medical bills, legal fees or a student loan can certainly fall under the category of "most crushing"
But.... what I find that gets many people into financial (or seemingly crushing) debt is simply... spending beyond their means.
Last edited by john3232; 08-06-2021 at 10:17 PM..
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