Owning a home is still the American dream for most people. According to JP Morgan Chase survey published last spring, 87% of Americans found they dream about owning a home, 66% said they believe it is a good financial investment and 75% said it’s crucial to raising a family. Another recent survey, conducted by the National Association of REALTORS®, found that homeownership was equally popular with renters, as reported in RealtorMag.com. Even better, 68% of these renters said that now was a good time to buy a home.
What is one of the main reasons that people rent? It’s impaired or no credit. One of a few really good things you can do for your tenants, that is, once you’ve screened them with background checks, received the money, made sure the checks cleared, etc…before they move in…is to help them understand their credit.
My experience is renters that pay on time will almost automatically increase their credit score over time. Most often, regardless of the past, when someone pays their bills on time their situation will improve. You can help jump start them with just a little help and encouragement. Many times landlords can be seen like they’re looking down on their tenants as customers instead of a fellow human being (and then some really are alieonic ~ alien).
Who hasn’t been down in their life? We all have ups and downs. I avoid making a deal with someone who tells me they have never lost or been down. They are usually not truthful. Most of us, if we live long enough will have several ups and downs. Like NY Times Best Selling author, Harv Eker says in Secrets of the Millionaire Mind, “Every master was once a disaster.” The point is we’re all in this together through the peaks and valleys.
Helping someone understand their credit can change their life in a tremendous way. When I was a mortgage broker, I couldn’t tell you how many clients came in with little, no and/or bad credit. Most brokers and bankers turned them away (not so much in the early 2000’s when almost anyone breathing could get a loan-and that’s another story).
There had to be a way to help people that were credically impaired. Many brokers and bankers do not want to give a lot of time to difficult situations. Understandably so, as there is not usually very much money involved for their efforts.
In all fairness, much of my motivation was directly connected to my own experience. A while before I was a mortgage broker I had gone through a not-so-nice-divorce. I’m not so sure if there ever is a very-so-nice-divorce no matter what the situation. Not to say anything too bad…and let’s just say my credit was shot…foreclosure-collections-etc…
A few years after my NSND (not-so-nice-divorce) I was remarried and attempting to buy a house. That is when everything came out. Yes, everything and the kitchen sink. I learned a heck of a lot about credit, i.e. my own. It took me several months to get myself where I could get any kind of financing.
This was just before I became a mortgage broker. At the time I was in the Insurance business. Once I became a mortgage broker I felt for those that had difficulties in getting financed. Few mortgage brokers and bankers wanted to help. So I decided to do just that.
We concentrated on helping people improve their credit and particularly their credit score. We created a debt solution/repayment program. We worked with a company out east that was formally involved with Consumer Credit Counseling. At that time, their negotiations with creditors, did not impair the client’s credit like so many of them did back then.
Today there are all kinds of credit repair companies that have popped up everywhere you look. I always look at their programs. Unfortunately many of them are giving out misinformation. They are quick to take your money and not always much better on results than you can do on your own. Most everything that can possibly be done to improve your credit is easily done on your own.
This information can also help your tenants become good home buyers. You, as a landlord/owner/seller can cash out completely. In many cases when the tenant buys your house their payment is less than they were paying for rent.
Sure, we all want to make money. And Real Estate has made more millionaires and billionaires than most other vehicles. I am constantly reminded that it is not-so-much a Real Estate business and is actually a people business. It’s not all about money. Treat people like people, including your tenants, and always do the right thing. I approach every deal with the expectation that everyone will walk away smiling. It must be win/win/win.
If you would like a "Gifted" copy of my book, "How to Improve Your Credit Score," send a request to :