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 .
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