So if the report notes a non-zero number of cross references, your prospect has been using aliases. Apart from genuine name changes at marriage, this raises a warning flag. While some cross references may be created by typographical errors, be aware that people with poor credit can be crafty and intentionally misleading.

If the report contains defaults, show them to the applicant and ask for an explanation. The report may not be up to date, and people who are making progress with paying off debts will readily advise the situation, and give you some means of verifying their claims. But if you find that power or phone companies are chasing for collections, this shows that the prospect has a serious problem with managing basic household expenses, so proceed with great caution.

A person may have picked up a poor credit record through:
• Having gone guarantor for a family member (for instance, to help a sibling purchase an item, then that sibling leaves the country—and the debt)
• Visitors or extended family members have joined the household and racked up bills (power, water, phone) on their unsuspecting hosts
• A business or partnership has gone belly-up
• A marriage or relationship has failed
• An accident or severe illness has disrupted the person’s ability to earn and service existing loans
• Some entity has relentlessly pursued a debt and forced the person to declare bankruptcy.

Does this mean you should only rent to people with good credit?

Not necessarily. But credit is an acceptable parameter to use for discriminating among tenancy applicants, and it is hard to justify giving priority to people who have proven unreliable in the past.

But if you do sign up people with poor credit, let them know that you do not permit rent to fall behind, ever. Otherwise they will use the rent account as a free overdraft facility. As manager of a rental business, your response to a missed or partially-paid rent is an immediate phone call or visit, followed up with a “10-day letter” if firm action is needed. Your ultimate response is to apply to Tenancy Services for termination of the tenancy when the rent arrears have exceeded the 21-day limit permitted by the Residential Tenancies Act. If the tenant catches up before the hearing proceeds, you can withdraw your request for termination, but this option is at your discretion. For instance, if there has been a death in the family, you are more accommodating of an arrears situation, so long as progress towards catching up is negotiated and maintained.

Some landlords are unaware that WINZ will pay rent directly from a beneficiary’s income, in WINZ-acceptable circumstances. This is what most landlords would love to have, in all circumstances. WINZ appear reluctant to set up such an arrangement, but it can be done. For instance, I’ve written on the Tenancy Agreement form “On account of the tenant’s poor credit history, this agreement is subject to the rent being paid by WINZ directly to the landlord’s account each week. If confirmation of this arrangement is not received from WINZ in writing on or before (date) this agreement is void.” The keys are not handed over until the initial rent and bond money are received, together with a letter from WINZ stating that the rent will be paid directly. The prospective tenant is of course keen to obtain approval for such action by WINZ, and sets up an urgent meeting with the Case Manager in order to bring back a letter on original “hologram-watermarked” WINZ letterhead. So you go ahead with the tenancy. Even so, this doesn’t mean any less vigilance on your part—check the rent each week, and immediately follow up if it is more than a day late.

Managing rental property is no different from managing any business—you must get the money in.

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