Well first off lets deal with that difference is between the two bureaus, because it seems messages can go back and forth from people that may have heard or used one or the other briefly, etc etc etc. Is there a difference, a very small one, being a member of both bureaus in different capacities as we are I can comment that its usually the same bureau when you run it. Equifax has FICO in which they pay for the program providing a credit score while the credit score for Trans Union is their own brand called a TU Risk Score. The scores are similar; the information needed to pull files is pretty much the same. So (answer) with correct information both bureaus usually provide somewhat of the same report. Sometimes it can be hit or miss with either of them.
Now, credit screening is the name of the game once again. I am going to state this and make it clear, pay someone to help you through this process. There are a lot of people that have “grasps” on interpreting credit files, well if they were great at it, the word “collections” would never be heard of, so advice here, being that you are new to investing find someone that will walk you through the credit reports and help give guidance to what type of tenant is applying.
Now, for those that don’t know here is the information you require. RentChek, TVS, etc are licensed CREDIT RE-SELLERS. They are not rental help boards they sell bureaus. These companies are not there to help, they simply get you a bureau and say interpret it, if you need help with it well you can call them, good luck getting a hold of anyone and if you are lucky enough one of their “bureau professionals” will help you but I would be leary of that. Would you like to gander if the “bureau professionals” are former Equifax employees, bank managers, credit managers, they aren’t. Am I knocking them, no, I’m stating the obvious, they simply provide an online service for relayed credit reports. If you need help from a mortgage broker, do you rely on their secretary to explain the ins and outs of finance because they know a little bit of this or that?
All right I’m divulging secrets here that I really shouldn’t be but some of the comments in this section through me a little sideways.
Look for collection amounts in the amount of $3000 - $5000. This can indicate that a previous landlord has filled an order for eviction with a collection agency.
This entire philosophy is wrong, just wrong. People typically in financial trouble, are simply put, in trouble and are problematic tenants. Now here is a secret, when running credit on someone and you see derogatory comments or bad credit, walk very slowly away, in some cases run. Why, well because if someone ends up getting garnisheed usually the first person that doesn’t get paid is the LL. Those amounts above are prime dollar amounts to litigate for. However, I know whose going to proceed and who isn’t, HOW, well when you own in the collections field you find out what companies will sue delinquent balances and which ones wont, its called “blanket suit”. In other words, small balances collections may not be deemed as bad by us because we know the client is not going to bother with them, but usually there is a lot more waiting in the wings that you don’t really know about.
(Here are some figures for you, in Alberta an individual is given $800.00 a month to live off of and $200.00 for each dependant. Now lets say they make $4000.00 a month, and they have 2 kids that means they have an entitlement of $1200.00 you cant touch. After $1200.00 half of $2800.00 gets paid into court. So per month that person loses $1400.00 of their monthly income if garnisheed)
Now the bureau is what it is, it’s a great forum, but it’s only a forum no different than this. There is a plethora of information not on the bureau that can be very dangerous when granting tenancy. Remember the bureau only houses what is has LISTED by its members. A lot of landlords don’t have the volume to become members and wont pay the money to use a collections agency. And its not just landlords, the retail collection field is huge and its made primarily of individual clients who cant list on the bureau. Its the same with collection agenices, not everyone lists bad debt.
I can speak for hours on this subject and I apologize if I have rubbed anyone wrong here. I thank REIN for backing our company as an Industry Partner handling credit screening, court work and collections because of our expertise in the area, which is over 45 years.
Remember your property is an asset; pay someone that will guide you along the way to making informed decisions so you don’t have any problems in the future. And just a heads up, once a credit application is endorsed you don’t need any further endorsement you can run their bureau anytime that you have a viable interest in the tenant. But you shouldn’t have to need that endorsement for collection work right, which is if you screened them correctly!
Chris Bradnam
Managing Director
Credit Info Canada
(780) 486-1183