What is the credit risk mitigation fee?
Just like when leasing or buying a car or buying a house, we have found that people with lower credit scores are at higher risk of not paying rent and/or being evicted. In the auto industry and housing industry, this risk is covered by an increase in the interest rate. At Ironclad Property Management, this risk is covered by the credit risk mitigation fee.
Who is being charged the credit risk mitigation fee?
This policy is being implemented for new tenants with a less than 700 credit score and to existing tenants that have had a late payment in the past.
How much is the credit risk mitigation fee for new tenants?
The fee is $20 a month if FICO score is 650-699, $40 a month if FICO score is 600-649, $60 a month if FICO score is 550-599, $80 a month if FICO score is 500-549 and $100 a month if FICO score is below 500. If there are multiple people together the risk mitigation fee will be assessed based on the AVERAGE FICO score of all applicants (excluding co-signers). Applicants who do not have a FICO score may be assigned a score of 600 for the purposes of determining the credit contingency fee.
How much is the credit risk mitigation fee for existing tenants?
The fee will not be implemented on any existing tenant that has not had any late payments (most of our existing tenants) and $50 if the tenant has had late payments in the past.
Can I get this fee removed from my account if I make a certain number of on-time payments and my credit score has increased?
YES! The process would be for all residents over 18 years of age to apply to our website, authorizing us to pull their credit (application fee applies for each resident). We would then average the FICO scores and your new fee would be based on the new tenant cost in the question above. This would also help all party members increase their credit score as we do report on-time payments to the credit bureau.