What Stories Does Your Credit History Tell?

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What Stories Does Your Credit History Tell?
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As a landlord, I enter into financial agreements with perfect strangers on a regular basis. I have to trust people with whom I have no previous relationship with a very expensive investment – my condos. I decide who to work with based in large part on their credit history.

I’m extremely concerned with the well-being and upkeep of these properties as I intend to maintain them as rental property for a very long time.


Credit History

While a person’s credit report does not give a complete picture of that person, their character, or their future financial behaviors, it can provide a wealth of vital information.

A few concerns that a person’s credit history helps me address include the following:

Will They Pay on Time?

Like many landlords, my properties still have mortgages and those bills need to be paid. I’m most interested in working with a person who is going to pay the rent as agreed in a timely manner. If you have a poor credit history, this is a red flag for reputable landlords and property managers who’d rather not deal with the stress and headache of delinquent payers.

My condos happen to be in very nice, safe neighborhoods in an urban center where location is important for a number of reasons. Safety, access to decent schools, and proximity to transportation and various services will greatly impact quality of life. Since there is a demand for quality housing, I can afford to be very selective. I do require a tenants have a stellar credit history before I will even consider reviewing an application.

Do They Pay Attention to Financial Matters?

A person with a poor credit history isn’t automatically a problem tenant.  There are a plethora of reasons that people run into financial trouble. A 3-digit credit score can’t tell the whole story. However,

my experience with renting to individuals with lower credit scores has been unproductive. As such, I’m a lot less likely to work with a person whose credit history has shown a pattern of irresponsibility versus someone without late payments.

If someone prioritizes managing their financial matters then they are also likely to manage other areas in life well – including my rental property. That generally makes them good neighbors and that’s a win for everyone.

Are They Self-Motivated?

Paying bills in a timely manner is largely a matter of personal choice. There are tangible consequences to mismanaging your credit history, but they are not always immediately experienced. Maintaining an effective credit history or working to improve a poor one requires a sustained effort that people initiate on their own. This a great trait to look for in potential tenants because these are the type of people who

I’ve found prioritize financial responsibilities. No one enjoys tracking down payments and this type of headache can be avoided with those who resist finding excuses to meet their financial obligations.

While no credit history can accurately predict all future financial behavior, it does speak volumes. Given that we have limited objective means to judge the success of a financial transaction with a complete stranger, relying on a person’s credit history is still the most widely used tool. Knowing how much people rely on tools like the credit score should be enough motivation for everyone to work diligently to maintain or build a more productive credit history.

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