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help is on the way. Just like the FICO score, a credit score created by the Fair Isaac Corporation, updated their credit scoring system in January 2020 to include personal loans as a distinct category, new credit assessment systems will likely be able to account for the intricacies of how the pandemic affected a person’s financial standing. But just as you would not expect the financial sector to sit idly by while a worldwide disaster weakened one of its most essential tools, you should not sit idly by and wait for new metrics to return the tenant-analysis process to normal.
Property Managers Will Have to Strengthen Other Evaluation Efforts. This might go without saying, but there is no way around it: in the current absence of a perfect credit-checking system that contextualizes pandemic debts, property managers will have to place greater emphasis on their other means of appraising a prospective tenant’s financial responsibility. If you were to only call the tenant’s previous landlord, you should call their previous two landlords now. If you had only run a statewide eviction search on them, run a nationwide one now. Both of these examples should already be standard practices for all property managers, but if they are
not for you, take this opportunity to step up; it might be your only way to even things out if you can’t perfectly check credit. In addition, you can ask for verification of previous money transfers between the tenant and their landlord in order to support the tenant’s creditability.
If anything, the inability to rely on credit checks should make you even better at selecting tenants in the future, because you should retain the other skills and practices you develop as a result. As I have said since the early months of this strange and confusing time, and as I say about all adversity, the best thing we can do with it (after we finally come through it) is learn from it.
David Crown is the C.E.O. of Los Angeles Property Management Group, and has over twenty-five years of experience managing all types of income properties. Having managed properties in 16 states, Mr. Crown has been asked to serve as an expert witness in prop- erty management matters, and currently serves on the Forbes Real Estate Council. He can be reached directly at (323)-616-1438.
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