Don't be blinded by the bling

You are waiting at a property for a prospective tenant at an upmarket, 2 bedroom sectional title unit which has been listed at a monthly rental of R15 000 per month. Mr Fred Smith looked promising on his TPN pre-assessment check ... around the corner comes a shiny new Jaguar F-type.

Fred gets out of his sports car wearing an expensive suit and you think you may have found your landlord a new tenant! You take a look around the unit, Mr Smith is satisfied and says he wants the property. 

Later that same day you receive an Application Form showing that Mr Smith has a net salary of R50 000 per month, things are looking up. 

But, don’t be fooled! At this point, you need to run your RentCheck enquiries on Fred Smith. There are 3 Credex options that TPN provides: the Basic Credex, the Silver Credex with affordability score and the Gold Credex with affordability and squat score.

Basic Credex

When you do a basic Credex, you gain access to the base level of assessment, being the payment profile information and the default and judgment listings through both TPN and SACRA sources. With this check, you will see that Mr Smith has a spotless payment record and has settled all of his accounts in the past and on this basic level, Mr Smith’s current credit profile appears to be in good health. This basic credit score however only makes a prediction based on payment behaviour.

Silver Credex with affordability assessment

When you elect to perform a Silver Credex with TPN RentCheck, you are including an affordability assessment into TPN’s predictive model. 

On conventional scoring systems, Mr Smith with his R50 000pm net salary can afford a rental payment of R15 000pm, however what sets TPN’s affordability assessment apart is that the TPN assessment takes the applicant’s credit obligations that are loaded on the SACRA database in to account. For example, when you run a Silver Credex, the following will be included in the assessment:

•     Vehicle finance on the F-Type Jaguar  - R15 000pm
•     Cell phone contract - R1 000pm
•     Clothing accounts - R2 000pm
•     2^nd Vehicle finance for his girlfriend’s mini cooper -R5 000pm
•     Cell phone contract for his girlfriend - R500pm
•     A personal loan repayment - R4 000pm
•     Credit card repayment - R10 000pm
•     Debt collectors account - R5 000pm
•     Secondary Loan repayment - R500pm
•     A current rental property - R7 000pm  

    Total expenses excluding current rent:  R43 000                 

When these amounts have been factored into to the RentCheck enquiry with affordability assessment, it becomes abundantly clear that Mr Smith cannot in fact afford the rental of this property and stands to have his application rejected.

Gold Credex with affordability assessment and squat score

In addition to the affordability assessment, the Gold Credex incorporates an additional assessment on the likelihood of the tenant to squat in the property. Squatting is when the tenant fails to make rental payments and stays in your property to the extent that they are required to be evicted through a court application.

The squat score assessment considers the entire application as a whole, including their previous rental payments together with the affordability to determine the likelihood that they will remain in the property resulting in a costly eviction should the tenant default.

The importance of carrying out the TPN Gold Credex cannot be emphasised enough. A well-dressed tenant arriving at a viewing in a flashy car may seem on the surface to be an excellent potential tenant, however failing to dig deeper may lead to an expensive mistake. Not all that glitters is gold, unless you are using TPN’s Gold Credex that is!

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