Am I stepping over the line by helping tenants build credit?

Question

I volunteer some of my time at a local nonprofit helping others rebuild their credit and get their life back on track.  After I screwed my credit up so bad in my early twenties I feel it's only fair I help others so they don't make the same mistakes I did.

After having to explain to quite a few tenants how important credit is and what a credit score is I have prepared a small packet for all prospective or current tenants that gives them information on helping to improve their credit.  I hate to see some people give up when sometimes it's just getting things disputed or setting up payment plans to catch up on bills.  Some banks do it for free too.

Does anyone else do anything like this or am I just asking for trouble?

Kenny Dahill · Answer

@Brent Paul, it's a great idea.  If you can help others, why wouldn't you?!

Exactly what you're speaking of is something we discuss internally at Burbz.  We want to help tenants build their credit.  That's why a lot have to rent.

Talk to Shiva Bhaskar.  His business works to help people rebuild their credit.  Smart guy but also just a down-right awesome person!  I can't figure out to @ him so I'll provide his profile link: https://www.biggerpockets.com/users/ShivaB#0

Dennis M. · Answer

I think it’s a noble effort . I like you help your community.,however you must really be careful when you start mixing business with personal stuff . Handing out a packet is one thing but actually interceding into the tenants personal business of accounts and collections is not a good idea . Most renters are renters for a reason sad to say

Jennifer T. · Answer

If you set up rental payments through Cozy, that website will take care of posting that "positive" on a tenant's credit report. I believe it is technically in the category of the tenant making a payment on a line of credit. There is no charge to the tenant, as long as they set the payment as an ACH from their bank account. Though they can also pay with a credit card (charge for that). And no charge to the property owner, unless they want the payment faster, and then there is a small charge. I think $3 or $4. They do not post negative information, whether a tenant misses a rental payment or not.

I don't require my tenants to use it, but I strongly encourage it and point out it's an easy way to build/improve credit for a bill they're paying anyway!

I don't require my tenants to use it, but I strongly encourage it and point out it's an easy way to build/improve credit for a bill they're paying anyway!

Ola Dantis · Answer

I think it's amazing to help tenants out any way one can.

So far you keep it at that and no co-mingling personal and professional relationships because then it can become a slippery slope when some tenants perceive the smallest gesture as a "weakness". Of course, most tenants are reasonable; however, some tenants will try to take advantage. Seen this too many times. Even just one simple act of kindness, it's weird.

But the simple value of fair, but firm works all the time!

Anthony Gayden · Answer

I have heard that you can also report on time rent payments to credit bureaus and help your tenants build their credit that way as well.

Brent Paul · Answer

@Cameron Tope @Dennis M.@Anthony Gayden  Thanks guys.  I find a lot of people are very discouraged and don't know where to start when it comes to rebuilding their credit.  I made sure none of it references the nonprofit.  It would be great to see someone come back a year later and rent from me or buy their own house.  There is a big for profit firm here that people pay thousands of dollars to fix their credit.  Seems silly when all the resources are free.

I didn't realize there was a way to report rent and build credit. I will have to check that out.

The plan isn't to push this hard into every tenant but if someone does inquire about rebuilding credit I can give them the packet to guide them part of the way.

Zachary Ray · Answer

Your have a good mindset just be sure not to commingle and get messy with the business. Protect yourself as sometimes you can be liable when you intend to do the right thing.

Brian H. · Answer

Curious how this has been working out for you @Brent Paul. I have similar ideas for how I want to engage with my future tenants.

Bret Gillespie · Answer

@Brent Paul if you’re an agent and you can help them find a home once their credit is repaired, i think you’re smart. If not, you may be playing with fire 🔥 😳

Joe Splitrock · Answer

@Brent Paul I use Cozy for rent payment and they report to the bureaus. I market that as an advantage of renting from me, that you can help repair your credit. I see nothing wrong with giving your tenants tools or information to help them rebuild their credit. I would stop short of counseling or more personal interaction. I am always willing to help people, but in my experience most people don't want help or advice, which is why they get stuck. Great that you are helping out.

Am I stepping over the line by helping tenants build credit?

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