Cracking the Credit Check
Are you the Perfect Tenant?
One in two South Africans has an impaired credit record, and yet they need somewhere to live too. Many landlords will accommodate those with bad credit records, depending on their particular circumstances. It is important to note that each investor landlord will have their own appetite for risk resulting in the level of impaired tenant they are willing to take a chance on.
If you have a bad credit record, the most important thing to do is to ensure you avoid any further impairment and ensure that you are managing your current credit. Multiple judgements and defaults will be taken into consideration and viewed as‘ habitual’ when your profile is being checked.
The type of default on your profile is also important and will reflect on you as a tenant. People tend to settle their phone bills first, followed by their car payments and home loan or rent. The things that tend to be left for lat are micro loans and unsecured finances, as often people default on these accounts first. It is vital to note that these impairments will definitely be taken into account and viewed as warning signs, even if you do pay your rent regularly.
In these cases it is unadvisable to apply for any further credit until you have your existing payment commitments under control. If you are renting already, it is vital to note that it’ s not only your credit bureau defaults that will be looked at but your monthly payment behaviour will be looked at as well. If you pay your rent every month but happen to pay it late, this will be shown repeatedly on your credit record and will affect your standing in the eyes of landlords. Those landlords who rely on regular and predictable cash-flow for their own expenses( as many do) will be discouraged from considering you as a potential tenant of theirs.
Affordability is also a very important factor. Potential landlords will compare your current rent( normally making up 30 % of an individuals income) and other monthly credit expenses to your salary in order to gauge whether you could potentially afford their rent. Neither will you be viewed in isolation – if you co-sign a lease you will both need clean credit records. This means that if one person defaults on their rent the other will also suffer the consequences, a very important factor to note when seeking out a friend or roommate to share accommodation with, or when sharing a lease with your partner. If you are blacklisted there is still the opportunity to repair your name by proving yourself. Your favourability will be increased through actions such as offering to pay double deposits, providing surety against your agreement, or the setting up of a debit order for rental payment.
Although your agent will often suggest these solutions, if you make the first move you will be seen in a more positive light and these actions will contribute to building your own positive rental profile. As a landlord or agent, it is vital that you access a credit bureau report before taking on a tenant. It is your right to access this information and make an informed decision for yourself.
www. reimag. co. za Residential E-Book 2016 17