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How to run a credit check?

kornel

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Oct 24, 2009
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Thank you for your input and advice everyone. I`m just starting out and these details are fantastic. VERY much appreciated.

Kornel Szrejber
 

Berubeland

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Apr 26, 2010
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Here`s a few more tricks.

In some properties/areas it will be next to impossible to get people with great credit to rent your place within the timeframe in which you are prepared to accept vacancy loss.

The optimum would be to have great credit.

Here`s what I look for....

Look at the previous addresses and how long they have stayed at each one. Long term is best, it should match with their ID if they have moves 4-5 months apart in Ontario that indicates to me that they are being evicted.

Look for payment history timelines. Sometimes people with horrible credit will have had a hit to their credit all at the same time. This indicates an adverse one time life event such as divorce, job loss etc. While their score is just as bad as people who have never paid their bills on time in their entire life, they are much more likely to be good paying candidates than the others.

Employment is also listed on their credit report. Check for it matching current employment or previous employment.

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.

And finally beware the liar.... I`d much rather take a chance on someone who is upfront and truthful about their situation than the guy who tells me everything is great and I find out that`s he`s lying. I look for even small lies or inconsistencies in their stories. In my opinion the showing is the time to be really friendly and get potential applicants talking about themselves. If they are liars it gives them lots of time to reveal themselves.

It would be great if we never had to make these kinds of choices....
 

invst4profit

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QUOTE (kornel @ May 1 2010, 11:21 AM) Thank you for your input and advice everyone. I`m just starting out and these details are fantastic. VERY much appreciated.

Kornel Szrajber

http://www.ontariolandlord.ca/forum/

I do not know what provence you are in but there is a excellent Landlord site that is specific to Ontario. It`s actually a very good forum regardless of the provence you are in.
Due to the fact that you are not actually a REIN member you will not get a discount with TVS however if you pay to join the Ontario LL site ($49 ?) you will get a discount with TVS. I believe they charge members $13 or $14 per report.
 

creditinfocanada

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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
 
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