Someone who can’t make their rent payments due to poor money management tends not to get far in life. Often their irresponsible money management habits catch up to them. If your tenant is one of these people, you might feel like you got the short end of the stick and lose money on your property. But what tenants may not realise is the consequences to their financial history.
Being Blacklisted by CTOS
You might’ve heard of people being blacklisted by CTOS, a credit reporting agency. “Blacklisting” isn’t the right term for this phenomenon– CTOS doesn’t actually blacklist anyone, they only provide information to banks for credit checks and loan applications. There are several factors that affect your credit score.
Being “blacklisted” just means having a bad credit score, with the low end ranging from 300-650. This stops them from being able to get loans for houses or cars and might affect anything else that requires a look at someone’s credit history. Bad credit can haunt them from loan rejections on their accounts which will stay on record for a period of 6 to 12 months.
After settlement, overdue payments will stay in the CTOS system for another 24 months before being completely cleared. On top of that, it takes a minimum of 6 months of consistent repayment behaviour for your credit score to improve from the blemish.
Since SPEEDHOME is a legitimate public business, CTOS collects and compiles data to improve or downgrade someone’s credit score based on the reliability of their payments.
Former Tenant Facing Outstanding Balances
One former tenant was faced with this problem when they visited SPEEDHOME’s offices back in May.
Their visit was about a dispute of unpaid rent that happened in October of 2022 when the tenant abandoned the unit 8 months before. The tenant only came back to clear their bad credit due to CTOS complicating their loan application. They admit that they had an outstanding balance to pay and wanted to pay a lump sum to settle it.
How much did they owe to their landlord? A whopping RM10,798.50.
So the tenants made their lump sum payment, submitted receipts which were verified by our finance team before we sent an updated report to CTOS.
Surprisingly enough, they even asked for some of the furniture they left behind at the unit. Some people may never truly learn.
So what does this mean for landlords?
If your tenant needs to get a loan within two years after they didn’t pay rent, they’ll have some though luck and possibly return to settle them.
Property Management with SPEEDHOME
Sending credit data to CTOS might not be a possibility for you, which is why you need our property management. SPEEDHOME is always prepared to handle situations for returning tenants to pay missing rent and making sure all financial transactions are legitimate through our team.