Padzilla Blog: Tenant Tips for Living Large and More

Tenant Tip #14

Last time, I stressed how important a good credit score can be. Basically, the better your credit score, the better price for loans/credit. More goods and services will be at your fingertips as well. It makes finding loans easier, faster, and if you want to buy a home, it’s vital.

Well, good rental histories work like good credit. Many property owners and managers in Maine use firms like Tenant-Net to conduct a review of your rental history before you are accepted for an apartment.

That review will look at Court records (like evictions, money judgments and collections, bankruptcy, etc.) to see if you have had filings. They will also scour their databases to see if any of your earlier landlords submitted a rental history.

Guess what? If your record shows a prior eviction, or if you failed to pay your cell phone bill, car loan, etc. and a case got filed against you, each future landlord will be much less likely to rent to you.

GOLD STANDARD: On the other hand, if you have a stellar track record as a tenant (no evictions, paid bills on time, always kept the peace) that will help you not only find, but negotiate for the best apartments. Owners are always looking to find the best tenants, and if you are one, that track record… like good credit… helps you land that sweet new pad!

ARE YOU A GREAT TENANT?

Then here’s what you do. Ask your Owner-Manager if they send rental reports to Tenant-Net. If they do, great, make sure though they promise to file a report when you leave the unit. Ask for a copy. If they do not use a firm like Tenant-Net, ask them to consider it. It costs nothing to join, and they can file a report on-line 24/7 or over the fax.

If your Owner-Manager hesitates, just tell them Tenant Net will even pay them for the report! YES. THE OWNER CAN MAKE MONEY. So, it’s in their best interests to help you!!!

Just like a good credit score, a good report to Tenant-Net is gold for you. It will help make your next Owner more likely to rent, more likely to offer the best deal possible.

Your conduct determines your future… pay bills timely and you get a good score, good score makes loans easier and cheaper. Same thing with renting, what you do, your conduct, will partially determine your future options.

Tim Murphy
Padzilla.Com

Tenant Tip #13

You have all heard about credit “scores” and how important they are. Think of them like grades in school… basically the financial world ranks you on a scale based upon how likely you are to re-pay bills.

So, if for example you pay your bills, timely, your score goes up. Pay late, and your score goes down. Manage to carry more than 1 credit card, and pay both timely, your score goes up, inability to manage multiple cards, and your score goes down.

Carrying multiple financial obligations (car loan, credit card, card #2, etc.) shows financial strength. Failing to pay anything on time shows financial weakness.

The above is a boiled down example, but it’s meant to show how certain facts/factors can improve or lower your credit score. The big three credit agencies actually look at many, many individual factors and they plug that raw data into a scientific formula of sorts. At the end of it all you, me and everyone who enters the financial world are assigned a credit score based on these facts.

Does this matter to you? YOU BET!

For tenants, it can affect you in several ways. Let’s consider just a couple:

1. Finding a new apartment. Many property owners and managers rely on tenant screening services to find good tenants, and identify potential problematic tenants, including those who might fail to pay, or who have prior evictions. As they review applicants, owners will often secure your credit report and can assess your credit score.

Do you think they like low scores, or high scores? Of course, they understand the higher the score the better for them. At least one major Portland property manager has very specific credit score standard for leasing their property. Those whose scores fall below a certain number are not accepted.

In effect, having a poor score will limit your choices of apartments, and make finding one that much harder.

2. Purchasing a car. All banks use credit scores to make lending decisions. It may not be the sole factor, but it’s a very, very important one to any prudent lender.

Do you think banks prefer to loan money to folks with low credit scores or high? Simple question, simple answer. You know it matters to a bank. And, if the bank agrees to loan you funds to buy that new car, the actual interest rate you pay may be higher or lower based on your score.

Consider that last point. Banks do not charge uniform interest rates. One person might get their car loan at 4.95% while someone else pays 5.50% for the same money, to buy the same type of car.

Why? Because the two folks have two different credit scores, and one person poses more of a risk that the loan will default, and so their loan gets priced higher!

Having a low credit score can mean the difference to you between a car payment of 305/month, and a car payment of 395/month. What could you do with an extra 90/month or an additional $5400 over the course of typical 5 year car loan?

3. Moving into your first home, condo. That’s right. Someday you will want to own your home or condo. It matters here as well. Banks will loan based on your credit score.

No one said it’s fair, or perfect, but it’s the system used by today’s financial world. Heck, corporations, and even countries get credit ratings, and their loans as well get risk priced. So, it’s a fact of life these days.

Knowing that, you simply have to choose ways to improve your score, and avoid acts that injure your score. In the long run, this will save you big, big dollars…

Tim Murphy
Padzilla.Com