The entire country is currently very sick of commercials with sad face emojis and pouting voices all themed around saying “during these unprecedented times.” It’s all well and good to have a support system but if one more advertisement promises that now is a great time to buy a car because this one brand understands the world is changing but hey, look at this cool car, well, there will be more than one smashed phone screen.
The entire country is currently very sick of commercials with sad face emojis and pouting voices all themed around saying “during these unprecedented times.” It’s all well and good to have a support system but if one more advertisement promises that now is a great time to buy a car because this one brand understands the world is changing but hey, look at this cool car, well, there will be more than one smashed phone screen.
This is all incredibly irritating because no, now is not a good time to buy a car, which explains why some companies sneakily unlisted their ad campaigns. It’s one thing to remind people that hey, you can get your pizza delivered, and another to suggest restructuring their entire insurance policies or booking plane tickets for the fun of it. Even without mentioning a pandemic, it’s important to know that a recession, if not here already, is coming. In fact, most landlords and rental housing pros already know it’s here.
Unemployment numbers hit record highs this year. According to the Bureau of Labor Statistics, only a handful of record highs in the states weren’t set this year, leaving well over 40 of the remaining record highs across the United States blown to pieces just over the last few months. People are struggling. People are scared. People are hurting. Because of all this, the rental housing industry has come to a screeching halt.
This is all incredibly irritating because no, now is not a good time to buy a car, which explains why some companies sneakily unlisted their ad campaigns. It’s one thing to remind people that hey, you can get your pizza delivered, and another to suggest restructuring their entire insurance policies or booking plane tickets for the fun of it. Even without mentioning a pandemic, it’s important to know that a recession, if not here already, is coming. In fact, most landlords and rental housing pros already know it’s here.
Unemployment numbers hit record highs this year. According to the Bureau of Labor Statistics, only a handful of record highs in the states weren’t set this year, leaving well over 40 of the remaining record highs across the United States blown to pieces just over the last few months. People are struggling. People are scared. People are hurting. Because of all this, the rental housing industry has come to a screeching halt.
Tenants can’t pay their rent and landlords can’t evict their tenants. Therefore, many landlords can’t pay their bills. As for states where eviction courts are opening back up, there is a tsunami of eviction filings to deal with and tenants looking for their next place to stay.
The next vacancy you try to fill will be different from the one prior to all of the 2020 Madness. There is a very good chance that the applicants you get will not meet all your standard markers of ‘Very Good Applicant – Accepted!’ Evictions will hit them hard, the high unemployment rates even harder. Your current tenants who have managed to scrape by may not be fairing any easier. So, what do you do when your tenants have bad credit?
Tenants can’t pay their rent and landlords can’t evict their tenants. Therefore, many landlords can’t pay their bills. As for states where eviction courts are opening back up, there is a tsunami of eviction filings to deal with and tenants looking for their next place to stay.
The next vacancy you try to fill will be different from the one prior to all of the 2020 Madness. There is a very good chance that the applicants you get will not meet all your standard markers of ‘Very Good Applicant – Accepted!’ Evictions will hit them hard, the high unemployment rates even harder. Your current tenants who have managed to scrape by may not be fairing any easier. So, what do you do when your tenants have bad credit?
If you’re good at compartmentalizing, congratulations, that skill will be very useful here. It is important to remember that a credit score is just a number, one way of looking at a person to try and understand them from an objective perspective. As a landlord, it is perfectly reasonable to want tenants with good credit scores! That was a system designed for professionals like yourself to make an educated and informed decision as to who is the most qualified applicant for you to take financial risk on. You want to rent to the people with the lowest amount of financial risk to you!
Malcolm Gladwell fans may know what’s coming here. 2020 is an Outlier, a “statistical observation that is markedly different in value from the others of the sample.” While Outliers: A Story of Success is a predominately wishy-washy version of how to be successful in both a pessimistic view and optimistic, depending on your point of view, his point still does apply.
Things that have happened in 2020 need to be viewed under a different lens. What can you see as an outlier?
If you’re good at compartmentalizing, congratulations, that skill will be very useful here. It is important to remember that a credit score is just a number, one way of looking at a person to try and understand them from an objective perspective. As a landlord, it is perfectly reasonable to want tenants with good credit scores! That was a system designed for professionals like yourself to make an educated and informed decision as to who is the most qualified applicant for you to take financial risk on. You want to rent to the people with the lowest amount of financial risk to you!
Malcolm Gladwell fans may know what’s coming here. 2020 is an Outlier, a “statistical observation that is markedly different in value from the others of the sample.” While Outliers: A Story of Success is a predominately wishy-washy version of how to be successful in both a pessimistic view and optimistic, depending on your point of view, his point still does apply.
Things that have happened in 2020 need to be viewed under a different lens. What can you see as an outlier?
- There is only one eviction on their record and it is from 2020.
- They held long term employment positions up until 2020 but have since lost their jobs.
- Their credit score took a recent hit due to an eviction.
What are your options?
Modify your Credit Score Requirements
You can decide to “lower your standards” or lower the actual number you deem an acceptable credit score. It’s your property, you have the right to decide if you’re comfortable or not going this route. If you go this route, you’ll definitely want to keep up to date on current trending news about employment rates and ApplyConnect’s FICO Score Analysis to make sure you’re staying on top of the real world changes. You can also inform your tenants that they can keep up with their own score for free on a weekly basis. You’ll need to go above and beyond just a simple credit report, or eviction and criminal data to make this decision, because black and white decision makers won’t work in a review. By using alternative data products and an edited credit score requirement, you may find coming to a decision that much easier.
Increased Security Deposits
You can increase their security deposit. Some landlords see this as a solid way to combat anxieties when renting to someone with bad credit, but you should check with a local lawyer to make sure it is legal in your area. It may help with any nightly worries that having any tenant may be better than a vacancy, but what if? It’s one way to protect your property, and sometimes that small comfort is greatly cherished.
Go Month-to-Month
- There is only one eviction on their record and it is from 2020.
- They held long term employment positions up until 2020 but have since lost their jobs.
- Their credit score took a recent hit due to an eviction.
What are your options?
Modify your Credit Score Requirements
You can decide to “lower your standards” or lower the actual number you deem an acceptable credit score. It’s your property, you have the right to decide if you’re comfortable or not going this route. If you go this route, you’ll definitely want to keep up to date on current trending news about employment rates and ApplyConnect’s FICO Score Analysis to make sure you’re staying on top of the real world changes. You can also inform your tenants that they can keep up with their own score for free on a weekly basis. You’ll need to go above and beyond just a simple credit report, or eviction and criminal data to make this decision, because black and white decision makers won’t work in a review. By using alternative data products and an edited credit score requirement, you may find coming to a decision that much easier.
Increased Security Deposits
You can increase their security deposit. Some landlords see this as a solid way to combat anxieties when renting to someone with bad credit, but you should check with a local lawyer to make sure it is legal in your area. It may help with any nightly worries that having any tenant may be better than a vacancy, but what if? It’s one way to protect your property, and sometimes that small comfort is greatly cherished.
Consider a short-term lease. While month-to-month leasing comes with its own problems, it may be a half-way decent solution for now. A vacancy is just losing money, so filling the property even for a short while can be helpful. It will also minimize risk if the applicant’s credit score makes you wonder whether or not they’ll pay their rent. If they miss that first month, then you can issue their thirty-day notice and move on.
Go Month-to-Month
Consider a short-term lease. While month-to-month leasing comes with its own problems, it may be a half-way decent solution for now. A vacancy is just losing money, so filling the property even for a short while can be helpful. It will also minimize risk if the applicant’s credit score makes you wonder whether or not they’ll pay their rent. If they miss that first month, then you can issue their thirty-day notice and move on.
Require a Co-Signer
Have a co-signer. This is a tactic often saved for young adults first venturing out into the world with no credit score to speak of in the first place but can work here. If the rental applicant can find someone with a better credit score who could cover a defaulted rent payment. They may need to have an awkward conversation with a friend or loved one, but everyone has a part to play.
It would be a good move on your part to discuss these plans with a potential renter. Beginning a new tenancy should always start with some level of colloquial trust. You can start by saying you recognize the downward trend in credit scores that may not be uniquely this renter’s fault. By being open with your options, everyone can feel a bit better about what’s going on. Laying the groundwork for a trusting but professional relationship is important, and the transparency of what is to be expected from both parties will help ensure everyone knows what to do.
Maybe when everyone knows what they can expect, the TV will stop talking about unprecedented times.
Require a Co-Signer
Have a co-signer. This is a tactic often saved for young adults first venturing out into the world with no credit score to speak of in the first place but can work here. If the rental applicant can find someone with a better credit score who could cover a defaulted rent payment. They may need to have an awkward conversation with a friend or loved one, but everyone has a part to play.
It would be a good move on your part to discuss these plans with a potential renter. Beginning a new tenancy should always start with some level of colloquial trust. You can start by saying you recognize the downward trend in credit scores that may not be uniquely this renter’s fault. By being open with your options, everyone can feel a bit better about what’s going on. Laying the groundwork for a trusting but professional relationship is important, and the transparency of what is to be expected from both parties will help ensure everyone knows what to do.
Maybe when everyone knows what they can expect, the TV will stop talking about unprecedented times.
