Plano Community Homes Blog

Why is credit history important when applying for HUD subsidized housing with Plano Community Homes

When you apply for HUD subsidized housing one of the things checked by PCHSP is your credit history by comparing it to criteria that will determine if you qualify for subsidized housing. Some of the credit criteria include number of collections, late payment of rent at present or previous housing, delinquent debt and more. It is important to remember that if your credit history does not meet the qualification criteria, your application will be rejected and you will not be put on the waiting list. If you appeal the rejection without taking any good faith action, your application will be rejected.

You must keep in mind that if your appeal is rejected you must wait two years before re-applying.

PCHSP has established a set of criteria that we use to judge an applicant’s credit history to determine if they qualify for HUD subsidized housing. The following is a description of Plano Community Homes’ criteria:

  • Applicants with less than $20,000 debt or less than ten (10) negative accounts are given a thirty (30) day grace period to resolve credit issues that would otherwise lead to a rejection.

  • If the credit report reveals more than $ 20,000 debt or more than ten (10) accounts in negative standing, the application is automatically rejected with an opportunity to appeal.

  • Applicants with two (2) or more accounts in negative standing within the past two (2) years will be denied. Examples of negative standing are late payments, collections, bad credit status, etc.

  • Public records such as collections and judgments are included as negative accounts.

  • Each bankruptcy item or foreclosure proceeding within the last five years are included as negative accounts.

  • Any bankruptcy within the last five (5) years is grounds for denial, but an appeal to review his or her situation may be requested.

  • Federal and State Tax liens within the past three (3) years are counted as a negative account. Prior to the three (3) year period, we may request proof of payment/release on any Lien over $1000.00 that is still on the Applicant’s credit history.

  • Financial aid or school loans in negative standing are counted.

  • Any amount showing owed to a prior Management company can be grounds for denial. PCHSP reserve the right to ask for proof of payment.

  • Any other item(s) that appear on the credit report, which would reflect negatively on the Applicant, will be reviewed and a decision will be made based on the date, source, and amount of the action.

  • Lack of credit history is not grounds for denial.

To help you, let’s examine some of the things about your credit history and how to deal with credit problems.

The first step is to get credit reports which shows a financial history used to determine whether or not you have the means to pay the rent. Credit reports (sometimes called consumer credit reports) are records showing how you have borrowed money and repaid it and what money you currently owe (debts). Almost every adult has a credit report.

Before you apply for housing, it is a good idea to get a copy of your credit report to make sure there are no mistakes or old information that will hurt your application.

Your credit file has basic information about you, such as your Social Security Number, birth date, current and former addresses, and employers. It also lists what debts you owe and any amount that is due. In addition, it will include a summary of the number of times that any account was delinquent by 30, 60, and 90 days, the dates of the most recent delinquencies, and the dates of the most severe delinquencies. It will also list any accounts that have been turned over to a collection agency or for which there are any court judgments against you. It could contain public information about criminal arrests, convictions, and bankruptcies.

Your credit report generally does not contain information about your race, religious preference, medical history, personal lifestyle, or political preference. It could, however, contain information about a consumer’s “character” and “reputation.” Income and driving records are rarely included. The report does not include personal comments or opinions about you from creditors or debt collection agencies, such as notations that you are a “deadbeat” or a “lousy credit risk.”

You can obtain a copy of your credit history from a credit reporting company. There are three national credit reporting companies: Experian (formerly TRW), Equifax, and TransUnion.

You can obtain a free copy of your report from all of these companies simultaneously. You are entitled to one free copy of your credit report once a year from each agency. You may want to request your credit reports one at a time, every four months, so you can monitor your credit throughout the year without having to pay for a report. (If you ask the credit bureaus directly, they will charge you a fee to obtain your report.) To order your free report, you must go through www.annualcreditreport.com or call 1-877-322-8228.

The contact information for all of these reporting companies, is:

  • Equifax: 1-800-685-1111 or www.equifax.com

  • Experian: 1-888-397-3742 or www.experian.com

  • TransUnion: 1-877-322-8228 or www.transunion.com

Once you have a copy of your credit report, take a careful look at it. Check to see if there are any mistakes or old information. For example, there might be information from another person’s account on your report. Or it may show that you still owe a debt that has been paid. There may be information about a debt that is more than 7 years old. Information about your accounts can only be reported for 7 years from the date that you failed to pay a debt, except for information about bankruptcies, which can remain on your report for 10 years. Criminal convictions never become obsolete for credit report purposes.

If you believe that your credit report contains incorrect or old information, you have a right to challenge the accuracy of the report. To do this, write a letter to each reporting company that has reported incorrect information. Tell the credit reporting company what you believe is incomplete or inaccurate, why, and request that they correct the item. Include with the letter copies of any documents that show that the information is wrong or misleading. Keep a copy of your letter and the originals of any supporting documents.

By law, the credit reporting company must reinvestigate and correct erroneous information.

In most circumstances, the agency is required to get back to you with the results of the investigation within 30 days. You should also report the company that provided the inaccurate or incomplete information to the credit bureau and request a correction of its records. The creditor who supplied the information has a duty to correct and update the information. If the credit reporting company does not resolve the dispute to your satisfaction, you have a right to include a statement (in 100 words or less) explaining your side of the story. This statement must be attached to your credit report and provided to anyone who accesses your report in the future. If the credit reporting company modifies or removes bad information from your file, you have a right to request that they send the new credit report to any person who has received your report within the past six months. The agency must send a corrected report within 15 business days of your request. The agency cannot charge a fee for this service. If you have bad credit because someone has stolen your personal or financial information, you may be the victim of identity fraud. For more information contact,

www.consumer.gov/idtheft/

If there is inaccurate information on your report, you can challenge the inaccurate information yourself.

It is not worth paying someone to do it for you. For more information about the dangers of credit repair agencies, go to:

www.ftc.gov/bcp/conline/pubs/credit/repair.htm

Note: Credit repair agencies are not the same as credit counseling services. Credit counseling services, which are often nonprofit organizations, can help you get your debt under control. These services have trained counselors who arrange repayment plans that are acceptable to you and your creditors, and they may be able to persuade creditors to lower or eliminate interest and late payments. The counselors can also help you set up a realistic budget. These counseling services are offered at little or no cost to consumers. You can find the office nearest you by checking the white pages of your telephone directory under “Consumer Credit Counseling Service.” Or you can search the internet for Consumer Credit Counseling Service near you. Make certain that the agency is accredited by the Council on Accreditation (COA) or the International Organization for Standardization (ISO). The counselor should also be certified by the Association of Independent Consumer Credit Counseling Agencies (AICCCA) or the National Foundation for Credit Counseling (NFCC).

After informing yourself on your reported credit history, there are some steps you can take before you apply for housing.

Make minimal payments.

Offer to make minimal payments to previous landlords to whom you owe money and to creditors who have reported debts that you still owe. Paying even $5 per month on time shows that you are making an effort to repay the debt and can improve your credit, even if it does not significantly reduce the debt. Concentrate on previous landlords and those creditors who report to the credit bureaus.

Supply positive but unreported payment history.

Gather documentation of accounts which are in good standing, like medical copays or premiums, car insurance bills, child support payments, phone bills, cell phone bills, rent, utilities, program fees at shelters, storage facilities, or furniture rentals. Credit reporting companies do not usually include this information in their reports. Many, however, will add these accounts at your request―for a fee. But instead of paying the fee, you can supply the information directly to the housing agency where you are applying.

Explain damaging information

When you are applying for housing and you know the landlord will do a credit check, include a letter and documentation explaining your negative credit history. For example, you can show that a period in which you fell behind on bills was due to illness, unemployment, interruption of public benefits, or divorce.

Demonstrate positive income changes.

Point out any increases in income, stabilized income (for example, getting approved for SSI), or increased earning power due to education or job training. Point out why paying rent will not be a problem if the rent is subsidized. Or, if you had a disabling illness that resulted in falling behind on your bills, but you are no longer ill, this would also be important to explain.

Seek a reasonable accommodation.

If your poor credit is due to a disability, you should request a reasonable accommodation based on your disability. Accommodations can include requests to ignore credit history from a time when you were untreated. If you are currently receiving treatment, ask for approval of your application on the condition that you get a representative payee who will pay your rent.

Offer to have someone else pay the rent

Consider offering to arrange for a representative payee (if you are on SSI) or protective payments (if you receive welfare benefits).. Be aware that, once you get a representative payee, the payee will have control over how all your money is spent. If you don’t have someone else pay your rent, you can arrange for a Bank to send your rent directly to us.

If you have never borrowed money from any entity that reports to credit reporting agencies, you will have no credit history. Having no credit history is not the same as bad credit history. You should not be denied public or subsidized housing for lack of any credit history. But you may have to convince us that you can afford to pay the rent.

A good source of additional information is Consumer Action Handbook pg.14 – pg. 17.

For addition information about Plano Community Homes Sponsor Properties’, eligibility and qualifications see the Addmissions page.

Rhoda Byers

Executive Vice President

Plano Community Homes Sponsor Properties

pch@planocommunityhome.org


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