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How to Screen Tenants and Borrowers (for FREE) - YouTube
Channel: REtipster
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hey guys what's going on this is set
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from our a tipster blog and I want to
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show you about a really cool tool that
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can make it really easy and even free
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for you to pull credit reports whether
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it's for a tenant who's gonna live in
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your rental property or a potential
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borrower who's going to be buying a
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property from you with owner financing
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so if you're going to finance the sale
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for this borrower and first time I
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actually started doing seller financing
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with the properties I was selling
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believe it or not I was actually told
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that it's not worth your while and a
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waste of time to pull credit reports
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because when you're selling properties
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the way that I do were at buy them for
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you know 10% of market value and sell
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them for 50 to 70 percent of market
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value it's really easy to recoup all
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your investment so that you know say if
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the person pays for a few months and
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then defaults you can just repossess the
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property and resell it again and you've
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pretty much already made a lot your
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money back so from that standpoint it
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kind of made sense but at the same time
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I have to tell you when you don't put
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credit reports on people
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you best be prepared for them to stop
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hanging you and I would say like a
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substantial percentage of the time these
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borrowers will stop paying you if you do
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no credit checks and don't scrutinize
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that at all that's just something you
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have to be prepared for and I will tell
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you it is a pain like it's a major pain
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when you have to you know harass the
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borrower to make the payments they said
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they were gonna make especially if they
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like disappear off the face of the earth
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and they just don't respond to anything
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you send them it's a hassle even in the
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states where the foreclosure or
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repossession process is fairly easy even
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then it's something that I would rather
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not deal with so I can say if you ever
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want to investigate this kind of thing
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before you get into this kind of
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relationship with a borrower it never
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hurts to pull a credit report and
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luckily it's pretty easy to do it and it
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doesn't cost you anything and you can do
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it with this website here called cozy
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and cozy is actually an awesome
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cloud-based software that's intended for
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rental property owners and landlords who
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want to self manage their own rentals so
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that's kind of the idea behind it
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and as such all the language on the
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website is geared towards you know
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tenants and landlords and that's kind of
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how they address their audience however
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you can still use this software to pull
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credit reports when you're doing seller
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financing if you click the affiliate
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link beneath this video and then follow
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along with me in the next few minutes
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I'm gonna show you exactly how you can
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do it and I think you'll see what I mean
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it's pretty stunning how easy this is
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and just for good measure if you've
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never been through a credit report
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before if you don't really understand
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what you're looking at I'm gonna go
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through that as well just to help you
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understand what all of these facts and
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figures and numbers mean and what kinds
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of things you should be paying attention
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to as you go through this information so
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follow along and I will show you how it
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works okay so if you click that
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affiliate link I mentioned beneath this
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video you'll be taken to a page that
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looks something like this on the cose
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website and in order to get started
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pulling a credit report all you have to
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do is scroll down a little bit here and
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then click on screen tenants now and
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when you get started ordering a credit
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report there's a few different things
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you can do here first of all if you
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wanted to you can just get the credit
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report and that's just gonna show you
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their credit score their credit history
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and what their current financial picture
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looks like with regard to the debts that
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they have outstanding and that they're
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paying out you also have the options say
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if you're not interested in the credit
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report you could just get a background
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check to see if this person has any
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issues that you would want to know about
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however it's a pretty good value if you
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wanted to get both it doesn't cost that
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much more than just getting one of these
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so that's what I'm gonna do right here
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is just click this and that'll come in
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for me not only what this person's
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financial picture looks like but also if
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there's any big red flags that come up
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in their background check I'll know
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about that as well and as for the person
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we're gonna pull this on in order to
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show you what this looks like from both
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your perspective and the tenant or
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borrowers perspective I'm actually going
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to pull this on myself so I can kind of
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show you what it looks like to both
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people so I'm just gonna go ahead and
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put my information in here and the nice
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thing is this is literally all you need
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from your end is just the person's first
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and last name and their email address
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because he kind of handles the rest
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which I'll show you in just a minute go
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ahead and put that information in here
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and then when we scroll down here if you
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don't already have an account you can go
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ahead and create one right here
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personally I already have
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so I'm gonna go ahead and just sign in
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and do it that way go ahead and check
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this and send the request okay so now
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that email has been sent and it's just a
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matter of me going and checking my email
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yeah let's go ahead and do that okay so
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the applicant is going to receive an
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email that looks like this as you can
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see it's pretty straightforward pretty
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easy to understand just says who is
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requesting the background check and
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credit report on them you will notice
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that it uses the words rental
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application and landlords so if you're
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not actually using this for the purpose
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of doing a rental application say if
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you're doing this for like a seller
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finance deal or any other reason for
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pulling a credit report you just want to
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sort of explain to the person ahead of
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time what this is all about and why
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they're getting this but as long as that
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person is okay with it they would just
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have to go ahead and click on get
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started and then the applicant is going
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to see a page that looks like this and
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as you can see it's very straightforward
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there's no mystery about what's going on
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they can scroll down to enter in their
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payment information and then just
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complete all this personal information
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and then once that's completed they
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would just go ahead and check this stuff
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and go ahead and answer these security
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questions we're just gonna have to
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answer a handful of security questions
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just to verify our identity then once
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the applicant has answered these
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questions to the best of their ability
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and they're gonna click Next to purchase
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and pay for these reports okay so now
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we're brought to this page it outlines
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what reports are being pulled and who
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they're going to be shared with and
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remember this is the view that the
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applicant is saying so they're the ones
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paying for these reports not the person
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who is requesting it so that's just an
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important thing to keep in mind it's
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actually free for the person who is
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requesting it aka you and once we've got
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all that information Phil then we'll go
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ahead and click purchase and share ok so
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immediately after the applicant pays for
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that credit report it's gonna take them
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to a page where they can see they're on
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credit report and usually the background
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check if that's been ordered - it might
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say pending for a few minutes until that
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information gets pulled in and at this
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point I'm gonna jump over to a couple of
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examples of credit reports and
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background checks that Cosi will
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generate just so you can kind of see
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what a typical report might look like
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this right here is what the credit
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reports look like and as we can see from
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this example this score is 744 that's
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pretty decent I can't really tell you
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what metrics you need to use as far as
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when you should say yes or no
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to an applicant but I can't tell you
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from my experience in the banking world
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where we would lend you know millions of
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dollars to people for commercial loans
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the way we used to look at it was for
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the most part if a credit score was ever
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seven hundred and above that was pretty
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much a shoo-in there might be some tiny
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little issues in the credit report worth
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investigating but for the most part if
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somebody's score is you know seven
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hundred or north of that they're
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probably a pretty safe bet I think on
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maybe three or four occasions I saw
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credit scores that were over eight
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hundred which is pretty darn uncommon
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from what I've seen
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once the scores dip down to like 650 to
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700 and there may be a few questions you
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might want to ask and once it goes to
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the range of like 600 to 650 there's
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usually at least a reason or to why it's
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that low and the person hasn't
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necessarily done everything perfectly
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and once it dips below 600 that was a
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pretty major issue in terms of how we
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looked at it as commercial lenders it
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would be pretty hard to approve somebody
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who is that low again I'm not saying
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that you need to look at it that way but
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just to give you a frame of reference
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that was how we looked at it so really
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when you see that score that's helpful
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to know but that's not everything in
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order to really understand what's going
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on you have to scroll down and dig into
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the details of what this person's
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financial picture looks like from a debt
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standpoint what I really like about
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these credit reports pulled through cose
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and Experian is that they're actually
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very very easy to use a lot of the
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credit reports I used to look at in the
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banking world were ridiculously confused
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and it took me a long time and to really
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understand what I was looking at but
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these credit reports do a pretty good
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job of showing you a visual
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representation of what's going on so if
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we go ahead and scroll down when it
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comes down here to total monthly
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payments it gives you a nice little
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color grid illustrating what types of
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debts they're currently paying on so it
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looks like this person has more than
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half of their debt is related to real
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estate loans that kind of thing and then
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they've got some kind of a lease line of
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credit auto loan secured loan revolving
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charge account and credit cards so
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they've got a pretty diverse array of
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different debts that they're currently
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paying on and their total monthly
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payments are five thousand thirty five
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dollars basically what this is telling
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us is that this particularly applicant
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better have a pretty healthy income if
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they're going to be able to afford to
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make all of these monthly debt service
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payments
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and to pay for their own personal living
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expenses and make the payments that
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they're gonna have to make to us each
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month so that's just something to keep
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in mind when we scroll down further this
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also tells us what their total current
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balance is on all their deaths
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so they're their own about this much if
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they were to pay everything off today
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that's how much they'd have to come up
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with it also breaks down what portion of
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those debts are baked into lines of
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credit and auto loans and credit cards
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and that kind of thing when we scroll
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down further this is telling us about
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any accounts that I've ever been late
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and how long it's been since they've
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been late and any outstanding
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collections they have or any public
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records and this is looking pretty good
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for this person they don't have any of
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that stuff and it's something that I did
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use to see quite a lot in the banking
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world for whatever reason people would
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get like these medical collections where
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they would Oh like 50 bucks for
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something and it was basically a bill
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that the doctor's office never really
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gave to them but it was still going so
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this person didn't even realize they had
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this collection out for him and as a
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result it really kind of hurt their
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credit score and all they had to do is
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just pay it off to get it resolved so it
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is possible that you may come across
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collections from time to time that are
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pretty insignificant but if you're
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seeing collections that are like
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thousands of dollars and that's a pretty
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big red flag and you'll probably know
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this already just based on their credit
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score because this number up here is
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probably a lot lower if they have a lot
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of collections or a council 8 or public
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records or anything like that and when
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we keep scrolling down this tells us the
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account history and I think what this is
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typically doing is going back about 7
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years to tell you all of the accounts
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that are currently open and ones that
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have been paid off and closed as well
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the way this works on the actual report
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you'll get is that you can click these
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little down arrows and it will expand to
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show you all of this information for
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each of the accounts listed so for this
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one for example Department of Education
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that's most likely a student loan that
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this person has and it's got a current
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balance of two thousand seventy five
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bucks
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original amount was 4500 bucks and their
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payment is forty five bucks and all of
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these green circles with a seeing it are
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telling you that they have been current
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on all those payments so they really
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have no history of being late on this
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particular loan if you were to expand to
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each of these you would probably see the
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same thing for all the other accounts
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that they are
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we paying on or that they have paid off
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and closed when we go ahead and scroll
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down here this is also telling us some
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of the other enquiries that have been
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made into this person's credit and
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basically what this means is that at
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some point this applicant most likely
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applied for a loan or a credit card or
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something with these other lending
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institutions and at that point they pull
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a credit report on them - this is also
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going to list some of their previous
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addresses that may or may not be helpful
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to you but it's almost always going to
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be included there and then for
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employment if the person is currently
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employed you should see that information
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here and this can also be helpful when
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it comes to verifying a person's income
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because keep in mind this credit report
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is not telling you how much money a
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person makes it's just telling you what
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their current and previous debts have
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been and how effectively they've been
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paying those on the historical basis so
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this really isn't even half the picture
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of their total debt to income and what
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that looks like if you want to
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understand what their income is one
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thing you could do is get their past
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couple of pay stubs that they've
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received from their employer and that
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can just be used to verify what their
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approximate monthly income is you could
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also get their most recent w-2 and
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that's going to verify what their annual
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income was in the most recent tax year
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however that doesn't necessarily
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guarantee that they are currently
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employed it just shows what their
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historical income has been so it's
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usually a pretty good indication but
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it's not a guarantee that they're
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currently employed you could also get
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their most recent tax return which would
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detail all of their taxable income and
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exactly what that looked like for the
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most recent year so those are just a few
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of the things you can do to verify what
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the person's income looks like and the
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reason that's important is because you
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know to somebody who's only making 5,000
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bucks a month
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this is a ridiculously high amount of
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debt to be paying on but for somebody
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who's making twenty thousand bucks a
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month this is not bad at all so that's
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why it's important to understand how
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much money they're making and then kind
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of factor that into this whole equation
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of how much a debt they've got and then
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when we scroll down here at the bottom
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it's also going to let you know of many
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particular factors that may be hurting
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their credit score so these reasons here
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the date that the oldest account was
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open is too recent lack of sufficient
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relevant real estate account information
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the total of all bounces on accounts is
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too high or balances on bank card or
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revolving accounts too high compared to
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credit limits so a lot of times these
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things can be a little petty
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and don't necessarily mean anything bad
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but it's important to see this because
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that could be part of the reason why
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this person's credit report isn't 800
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and I will say if you ever do come
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across payments that are late or
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historical payments that have been late
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or collection accounts or anything like
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that it doesn't necessarily mean you
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need to automatically turn them down it
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could but it could also just mean you
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need to have a conversation with that
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applicant to understand okay why are we
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these payments late
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why are you currently late on this are
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you gonna get this resolved is this
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something we can expect to see from you
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if we take you on as a tenant or a
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borrower the credit report is going to
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equip you with a lot of information to
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just help flesh out the story and
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understand what is going on and what
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kind of a person you're dealing with in
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terms of financial responsibility so
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that's just a quick overview of the
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credit report in terms of the background
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check if you do pull up background check
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it's gonna look something like this
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example and hopefully on the background
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check you pull is just gonna show a lot
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of green clears right here but if there
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are any issues they would show up
[846]
something like this and you would have
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to then investigate or ask questions of
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the applicant just to find out what's
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going on here and that may or may not
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cause you to deny them it's really up to
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you but this will at least let you know
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if you're dealing with anybody who's got
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any kind of a checkered past it doesn't
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necessarily mean you have to turn them
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down but again that's up to you to
[864]
decide and this will kind of help
[866]
understand who you're dealing with
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so again that is cozy and that is how
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you can pull credit reports and
[872]
background checks through this service
[874]
again this is kind of intended for the
[876]
landlord tenant relationship but as you
[878]
can see from the example we just walk
[879]
through it's pretty easy to use this for
[881]
pretty much any purpose when you need to
[883]
pull a credit report or a background
[885]
check and all of that landlord tenant
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terminology it doesn't necessarily get
[888]
mentioned a lot or mixed into the
[890]
process so I think as long as you
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understand how to use this and you want
[893]
to use this it's pretty easy to give
[895]
this information on your applicants and
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it doesn't really cost you anything so
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it's pretty slick service definitely
[901]
worth checking out again I've got an
[903]
affiliate link to cozy beneath this
[904]
video if you end up clicking on that and
[906]
ordering your credit reports through
[907]
that it will generate a very very small
[909]
commission for the re tips your blog so
[912]
if you choose to do that I appreciate
[913]
your support so much and of course cozy
[915]
is not the only place to get this
[917]
information I just think it happens to
[918]
be one of the easiest ways to get it
[921]
hopefully that makes sense thanks again
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for watching me and we'll talk to you
[923]
later
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