Ever been denied a rental because your credit score was too low? Or perhaps as a property manager, you wanted to do something more for a denied applicant. Dylan Shively, founder of the James Warren Group, talks with Brad about how your credit score works, how you can make it work in your favor, and the benefits a property management group could have by working with a credit score miracle worker.
Learn more about the opportunities of real estate investment and property management at www.rentwerx.com!
Video Transcript:
Brad Larsen: Hey, everyone, the property manager mastermind conference twenty twenty two is going on at the Red Rock Resort in Las Vegas, Nevada. Go to PMM.com to learn more and sign up. Welcome to the property
Announcer: Management mastermind show with your host Brad Larsen. Brad owns one of the fastest growing property management companies in San Antonio, Texas. This podcast is for property managers by property managers. You'll hear from industry leading professionals on best practices, new ideas, success stories and lessons learned. This is your opportunity to learn about the latest industry buzz surrounding property management, as well as tips and strategies to improve your business. Enterprise Bank and trust the bank you all formerly knew as Secrest Commerce Bank with the same team, the same benefits and an expanded and improved product suite. Enterprise Bank and Trust specializes in trust accounts and business banking for property managers. One of their best features is a cash analysis program where they can assist in paying your property management related invoices. Contact Allison at six one nine nine eight eight six seven zero eight. To learn more. Need a repair at two a.m.? Easy does it. Easy repair coordinates maintenance and nothing else and takes after hour maintenance. Calls for property managers working with your property management software so you can see exactly what Easley is doing without leaving your own software from Las Vegas, Nevada. Our full time maintenance coordinators will dispatch your work orders directly with your vendors. Give us a call at eight hundred four eight eight six zero three two or visit our website. Easy Repair Hotline LLC.
Brad Larsen: Welcome everybody to another edition of the Property Manager Mastermind podcast show. I'm your host, Brad Larsen. Now today's guest is going to be really fascinating and interesting because it's a conversational topic that we just haven't touched on yet very much in the property management industry. I'm going to be introducing Dylan Shively, and he's with James Warren, and it's a credit repair credit restoration type of a company. Now, I first heard about Dylan on another podcast from a couple of local San Antonio realtors who brought him on. They interviewed him and I'm on one of my morning walks, runs running the dogs, and I'm listen to this. It's about a forty five minute podcast, and I thought it was fantastic because it one hundred percent applied to what we do as property managers, what we do as real estate individuals. Because most property management companies have some sort of sales arm and we all deal with tenant credit issues because we get literally hundreds, maybe thousands of applications in a year. And a lot of times we have to turn them down via credit. And we hate doing that because we're we're pushing potential customers away from us. So Dylan and I are going to have a real good conversation about some of the roots of credit repair, what they do at James Warren. And I just I just thought it was fascinating. I want to bring them on. So without further blah blah blah for me, Dylan, give me a few minutes to tell us who you are, what you do.
Dylan Shively: Hey, man, I just want to say again, thank you so much for for letting me be on here. So our company, what we specialize in, is helping people get educated about how credit really works. And I think just like anything else, the core fundamentals of credit is what needs to be understood. Actually, I make a lot of the relations just like when it comes to working out. So until you get surgical and understanding in counting your macros and figuring out how you target the certain muscle group that you're working on to help grow until you get dialed in on those things, you don't know how to get that physique or that build that you're looking for, and it's the same thing with credit. So we help a lot of people build their strengths and knowledge and understanding on how credit works and then how to leverage it to their benefit. We're also shifting the mindset of people to say, Hey, you know, whatever happened in your past, you know, year or two years, four or five years, that is not permanent, then negative marks that are on there and the current life situation that you're in at the moment that is not permanent, it can all be fixed. So that is essentially what we what we're helping with. We empower people. We get them more educated about how credit works. We even will go above and beyond with helping them disputing negative items, removing negative items and coaching them through how to exactly get the healthy profile and the good scores they need so they can start improving the overall quality of their lifestyle. Because I thought,
Brad Larsen: Oh good, I want to elaborate a little bit more and then I want I want you to go further back and tell us a little bit more of your story because I think every property management company, person or property manager or whatever your role is in the world of our industry, you need to pay attention because this has applications that are numerous. So let's talk through where they're going to actually apply and what we do. All of our tenants that apply for homes, if you have to potentially deny them, you should try to help them. Put them into some sort of contact with a credit repair or credit restoration type of a company like what you're doing because they could turn around and either one give you a good positive Google reviews or to come back to you and rent from you later on. Ok, that's just from the very surface. Now, second level is when those tenants get into your homes and your owner wants to sell the home or that tenant wants to buy a home. Maybe you match the two together and put a marriage of a deal together where they buy the home from you, or they buy another home from you, from one of your agents. Because a lot of times why they're renting is because they don't necessarily have the credit perfectly to go ahead and get into a purchase type situation. So there's a lot of reasons they're just in that small lifecycle of what we do in the business world that this is going to apply to you. So having babbled all that, I want you to back up a little bit and talk to us more about kind of how you got into this. Tell us your story. I think it's pretty fascinating and I wanted to to elaborate this with the listeners. Go ahead.
Dylan Shively: Yeah, I appreciate it. So I mean, I feel like my story is boring just because it's mine. But previous history and what I did, I used to be a managing partner for a Verizon store. And so I was in the retail sales, so I was used to, you know, grinding out the weekends, doing all that fun stuff. Holidays work those everything. And what I might start to run into is a lot of people that because you finance phones nowadays, because there are a thousand to two thousand dollars that they're trying to get phones and they weren't getting approved. And I was like, Man, this kind of sucks because this is hurting my business because I can't get them approved. Just like I'd imagine that would be the same in property management. You'd love to fill your buildings up with tenants, but if they're not approved, they're not approved. So I personally, myself, when I was younger, I've always had good credit until I started getting into cars. And when I got into cars, that's where I put a lot of my finances, a lot of my credit, a lot of my money into it. And I have no problem, you know, exposing this. But there was a time where my credit wind up taking. I got one of my cars repaired because my income wasn't the same. I was trying to get things going, and I just kind of keep up with it.
Dylan Shively: So I actually wound up being my first customer because I went to Google right away when my scores were going bad and I couldn't get approved for anything. And I literally went in and just start saying, like, how can I fix my credit? So as I'm looking it up, there's little letters here, there's videos here, but it wasn't anything that was solid. I wind up finding a company hiring a company and literally two. It was about twenty two hundred dollars later invested into this company, barely ever hearing from them until I had to give them more money because it was actually wind up being debt consolidation, not a real repair. I was out of the money. My scores were worse than what I started with them. And so I wanted to learn it on my own. So I started finding out how you can be certified, how you can work with the bureaus, how you can do all the things necessary to handle it yourself. And here I am as a credit repair business owner today, still telling people they can do it themselves. And I know that sounds crazy, but I'm telling you the truth. You can do it yourself. But the reason that credit repair companies like myself exist is because we are just taking all of the legwork out of it, because some people don't want to take the time to do everything, and that's perfectly OK.
Dylan Shively: That is the reason that we're here. So I wound up being my first customer. I wound up getting good results and then I posted it on Facebook because I was proud to get myself back in the situation. Then I started getting all these DMs. Everybody started messaging me, Hey, Dylan, I got this going on. Hey, can you help me? Hey, how'd you do this? Then I started making it a business where that income was floating on the months that we weren't doing well at Verizon, you know, because as a managing partner, just like I share profits, I also share losses. So on our on our slower months, I had to come up with it somewhere. So long story short, I wound up selling the managing partner store and I went full time with this. And once I started helping people get into homes, getting approved for apartments, getting them new cars, helping them get approved for actual good credit cards, zero percent for 18 months and high fifteen twenty thousand limit credit cards. I was like, Holy shit, I'm doing something here. Like when somebody comes in and they speak with me, I'm actually able to make a difference. So that's where all of this came from. I wind up being my first customer. I posted it. I started helping other people and then it absolutely exploded from there.
Brad Larsen: There's so many applications I'm thinking about with the the property management industry. One of the objections. This is kind of this might blow you away a little bit. One of the objections you will get from other my, my peers, my colleagues, is they don't want to help the tenants with credit repair. They want them to rent forever because. In their attitude, they're like, well, I don't want them to buy a home and leave, I want them to stay in my rental unit forever and ever and ever, and I say that's kind of the wrong way to think. I would say, you want them to get to a situation where they can buy a home and then buy a rental home and then have you manage it? And so if you do the right thing, of course, you could obviously get the sale for that as a buyer's agent, right? You can you can get them set up. You can get them teed up for getting their credit to where they need to be. You can get them preapproved or whatever local lender you like using. And boom, they're ready to go and you know, it's got to buy them a home. So I think that's interesting. Now the other side of that is, again, we work with so many applicants and so many tenants that come to us. I would say the average property management company does 10 times the volume of what your average real estate agent would do as far as people they connect with that potentially could use the service.
Brad Larsen: And so it's an interesting part because if you talk about long term implementation, maybe there's an opportunity to implement this in one of our monthly programs. We have all these different, you know, as property management companies, we have all these different monthly programs. We have a resident benefits package, we have maintenance service packages. We have all these things that we can charge for monthly credit repair on the tenant ledger because again, we have them, you know, right where we want them or right where we need them to, where we can press the easy button with them and say, Sign up for this credit repair, we'll charge you x per month. It'll go into your tenant ledger and you can start working with our group over here. And so just interesting implications there on getting them into our system. Now, one of the things I heard about on your episode is I want you to talk about the different levels of credit. This was a previous conversation you were having with those those guys on the podcast before there were three or five different levels of credit and five or seven different credits inside of that. I thought that was absolutely mind blowing, and I want you to really go through some of that because that's going to teach a lot of us. There's a lot of different levels of credit, from vehicles to homes to whatever. Keep going.
Dylan Shively: Absolutely. So one thing that I just want to touch on right before I go into it because it hit me the second that you said it, it was the same thing that I agree with two words you said long term. So when you were speaking about, you know, hey, they may not want people to get their credit repair, they want to keep them as tenants forever. That short term thinking, and I'm sorry if that offends anybody, that's listening, but that's the reality of it. My job isn't to be your best friend, it's to it's to provide you with the value and the truth. So that is very short term thinking. So that tells me that that person only just wants tenets in that one building, and they're only thinking about that every single time where here is another way you kind of touched on it, but I just want to expand for a second of the long term thinking if you're going to be in property management forever. That is great. However, what happens when you do help somebody with their credit and that tenant moves out? Oh my god, now I don't have a tenant. You will always have a tenant because you're going to have somebody that can fill those shoes again, that could renew that lease again. Plus, you have no idea how grateful those tenants will be. I personally think it would make you stand out as a property management company if you're going above and beyond and helping them because you don't know who they know and you now have a earned interest with them where you've helped them either go into a rental home or buying a home, whatever it is, you've helped them get further. Naturally, they're going to want to refer you more people, not if you keep them in the same place and don't give them the ability to grow and expand. So maybe they're in an apartment complex and then they want to go to a rental home. You can help them do that, and they'd be more willing to do that if their credit was higher and you were the one that helped them.
Brad Larsen: And I see this, this exact scenario playing out here is how it's going to work. Again, we get lots of applications that come in. I think at my company rent works, we rent about four hundred and fifty homes a year, so we figure three to five applications per home. Let's just call it a couple of thousand applications per year. And so if we get somebody with a credit below X, I don't want to go through all my screening criteria. It's just boring. But let's see. Their credit is below X. Instead of sending them to the average denial letter, the adverse action letter with a giant middle finger basically is what it is. We say we could say something to the effect of here's your your federally required adverse action letter, but we want to help you. We're going to refer you over. Contact this company here, use this discount code, tell them we sent you to you and try to get your credit better. Then come back to us. Exactly right. And so I think that's how we should look at implementing something like what you do into our process is almost immediately because I think there's there's value in that and I want you to I want to just bring it up to the to the listeners because that's how I was thinking about this. As far as our company, I think that's going to be tied right in to what we do just in the application process, not even the buyer side, not even the tenant side. That's that's in our homes for five years. I'm just talking the upfront applicants. That's that's their first introduction to rent works. And let's say we have to turn them down and they know they're going to get turned down right. They know because their credit is really subpar, but at least we try to help, and that's going to reflect in reviews. That's going to reflect in word of mouth. I think that's a very positive thing for us to look at doing.
Dylan Shively: Yeah, I agree. A hundred percent. And let me let me go ahead and transition into now. Those five factors accredited how many different credit scores there are because this is my favorite part. I love educating about credit, so I'm going to throw a lot of numbers out. So this may need to be slowed down. It may need to be replayed. You may need to do whatever that is fine, but you need to know the facts. So we all know the three credit bureaus TransUnion, Experian, Equifax when it comes to a lending decision now in property management and getting an approval for that, maybe you can help me out here. Maybe it's different, but I know when it comes to actually applying for a mortgage, they're going to look at a client's mid score, right? So they're going to take all three bureaus and they're going to take the middle score of the three. And that's going to be that mortgage score. Now there are 28 different FICO scores that we have, and the reason that we have 28 different FICO scores is because there are so many different things that we can apply for every single day. Like I said, you can even finance your cell phone now. You could go to Valero and get a gas card, a gas credit card you can finance when you're getting gas. That's crazy. You can finance anything auto loans, personal loans, mortgages, lines of credit credit cards, everything. So the purpose behind all of these different scores is because they are getting more surgical with trying to understand who you are as a borrower in that same field of what you're applying for.
Dylan Shively: For example, if you're trying to apply for a credit card that is your FICO eight score, and so all three bureaus are going to give you what your FICO eight score is that is registered with them, and FICO eight is weighing out heavier than any other type of credit. They're looking at your other revolving credit accounts. Right, so before they say we extend you this credit card for ten thousand. We want to see what other credit cards you have in how you've been maintaining them and how long you've been maintaining them because all your credit scores are all 28 of them. Those are just a calculated number for a lender to assess what your risk level is, right, how risky you are as a borrower to them before they give you the money. Now, to know how credit works and how you can influence those scores, you need to understand the five factors that influence those scores. So the number one influence to your score going up or down is payment history. Payment history controls thirty five percent influence now to convert that over to the point system, or how many points and how does that affect me the lowest your score can be as a three hundred. The highest your score can be as an 850, which means five hundred and fifty points is what your scores can fluctuate total. And then we divide those up by the five factors so that thirty five percent influence for payment history. That's one hundred and ninety two and a half points.
Dylan Shively: So this is why it's so detrimental when you're either under contract for a home or when you're trying to apply for a new apartment or a rental home or a car. You want to make sure you do not miss any payments that you are not late on any payments because it can affect you up to a hundred and ninety two and a half points. That's almost the difference of being in the five hundred to the seven hundreds just by controlling and maintaining your payment history. Now, number two is utilization. So this is going to rabbit hole me for a second, but I promise it'll be all worth it. It'll come together. So utilization is not how much you have spent on your credit card. It is the balance that you're carrying over. Let me give you an example. So if you have a thousand credit card and you've spent $500, you've utilized 50 percent. However, what is going to report your overall utilization is the balance you carry over after that billing cycle. So if you spent five hundred on a thousand credit card and you have 50 percent utilization but you've made a four hundred dollar payment by your statement date, there is a due date and a statement date. The statement date is the day that the balance cuts to the credit bureaus. It's the remaining balance you carry over. So if you make a four hundred dollar payment on or by the statement dates, now you'll have a remaining balance of one hundred dollars. Of that thousand credit card, you are now only going to report 10 percent utilization because it's the balance you carry over, not what you have spent.
Dylan Shively: Now, why is that very important to know and why am I harping in on that? Because I don't know about you, but I know one. I didn't learn about credit in school. Nobody taught me these specifics. But. The people that we get advice from all the time, which is typically a family member or friend, a coworker. Kind of give us some misguided information, not intentionally, but it's because we just don't know what we don't know, but everybody loves to hear themselves talk and they always want to put their two cents in without being able to give you the fact that documented fact. So the documented fact is utilization is the balance that carries over. Which means I'm going to teach you how to use your credit cards properly because credit cards aren't bad. They're not the devil. It is not the credit cards fault that you spent the money. Nobody taught you how to properly use it, when to use it, how to use it, and now you're into this debt. So the fastest way to fix your credit score is if you have active credit cards is getting a hold of those balances because that 30 percent influence that the utilization carries. That's one hundred and sixty five points. That's what it correlates to, because five hundred and fifty potential, 30 percent of that is one sixty five. So to kind of wrap that up there, when you're using your credit cards, find out what the statement date is on each and every one of those credit cards.
Dylan Shively: Grab your phone, use the calendar and then make a mental or put an actual reminder for every month of the statement date. Of those credit cards, you can use as much of the credit card as you like responsibly with discipline. What I mean is this don't spend $500 if you don't have $500 in the bank, but the reason I'm telling you to spend the $500 with the credit card instead of the debit card is because the credit card company incentivizes you by reward points, cash back mileage points to use their money instead of yours when you swipe your debit card. You got no incentives and the money is immediately gone. When you use a credit card that gives you some cash back or mileage or whatever. Now you're stacking up cash back points and mileage points and all of it. If you make the payment by the statement date, which you'll always get the reminder from the calendar with your cards on the statement date. If you spent a little bit more but you need a report, a smaller balance, make your big payments on the statement date. So then that way you can utilize your credit cards effectively. Like I remember being told when I was growing up. Don't use your credit card. Keep that card all the way in the back if you don't have the money saved up three times or whatever. Don't buy it. You know, don't use the credit card unless you absolutely have to.
Brad Larsen: Specifically, on credit cards, I've heard that they want you to carry a balance of a certain percentage. Is that a misnomer, or is that an actual good idea?
Dylan Shively: So that's an actual thing, but let's get surgical on it. Most people say, Oh, 30 percent, you probably owe keep it under 30 percent or no more than 30 percent. Well, the exceptional tier, the top tier of that to maximize your potential scores going up by your reporting balance is between one and nine percent. So under 30 percent is good, you know, it's going to be good, but the reality of it is this I don't know about you guys, but I'm willing to admit my faults. I don't always remember everything to a tee, which is why I gave the tip of putting all the statement dates in the calendar. So you get the mental reminder to make the payment. So say my card is at 27 percent utilization, but I forgot that that was, you know, the exact amount and I swipe it for dinner or I swipe it for gas. And now I put myself over the 30 percent because it won't take much. Then I'm right back down where I was just working at. So this takes discipline, but one to nine percent is the exact place you want to be.
Brad Larsen: That's interesting. That's interesting because you figure, let's talk through that so you get a $10000 credit card limit. Write for fun, easy math. You're saying that we should keep seven hundred to nine hundred dollar balance
Dylan Shively: So you can keep a lower balance that is on the maximum side of what you should keep, because I know right now whoever is going to be listening to this part is like, but Dylan, my credit card company charges me twenty five percent. I don't want to pay interest on the money. That's why I use my debit card. I'm not telling you that. What I'm saying is if you keep that seven hundred dollar balance, you know you're going to be in the best position possible to have the highest score. But if you have the ability to pay it down even further, if you leave one hundred bucks on there or 50 bucks or $5 or $10 anything, the closer to zero, the better. You don't want to exceed pass on that same concept. You want to exceed past nine hundred dollars. If you want to keep your score at the highest point, it could be. But to avoid paying the super high interest, leave a remaining balance of one hundred dollars or less because they're not making a ton of money on the rate. They're right. Like, let's say, if you left twenty dollars and they're getting 20 percent of twenty dollars, who cares? Because now what's happening is you're leaving a remaining balance on there that eliminates the credit card company from decreasing the limit or shutting your card off. The reason I'm mentioning this is because some people, once they get a hold of their credit cards, they pay them all down and or they pay them all off and they're like, I'm going to cut them up or I'm going to throw them in the drawer. I'm never going to use them again. But then what winds up happening is the limit gets decreased and then you go to use it one time and you realize, Wait a minute, why don't I have the same limit? That's your first warning. Then the second warning, if you maintain these zero balances and don't use them, they will shut your card off and your scores will go down.
Brad Larsen: Here's the question. So a lot of us are listening to this, or we're probably I'll just throw my situation out there. So let's say I've got two or three different credit cards. Let's say they all have a 30 grand credit limit. I just like, use them and then pay them off every month. Am I like the odd one idiot to do that? Or is that hurting me? Tell me. Tell me more about this.
Dylan Shively: Yeah, so you're definitely not hurting yourself. The the step, the additional step I would say to take is just find out what the statement date is and if you plan on paying it pretty quickly. You have until the statement date, but if you pay it before then you're solid because the due date is just the reoccurring payment of when they want their money. But the balance that's being reported is by the statement date. So like, for example, even myself, I swipe my credit card for everything because they're going to incentivize me with reward points and cashback, but sometimes I will immediately log into my app and schedule a payment. That's OK. You're not doing anything bad, right? That's going to help you, because now you're maintaining that keep those balances low. So even if you have the extra money in the bank, I'm still saying use the credit cards because like, for example, I have a American Express more rewards. It's through Navy Fed credit union and they give phenomenal cashback. So what I do, and sometimes when I stack up enough and I know that I'm getting ready to make a payment, I'll cash out the cash back points and pay them back with their money instead of mine. Now I'm truly leveraging their money because I've swiped their money and then they say, Hey Dillon, it's time for us to collect on the money that you've spent. We want a minimum payment of this, or we want at least this, and I say, Hey, I'm willing to give you this much. Let's go convert my cash back points out. And here you go. It's your money anyway.
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Brad Larsen: Much of the housing for what's left of the housing portion, so. So what we use is we use the rent screener app financed through rent buying, which is all software you probably never heard of, which is fine. The point of it word going is that they use the TransUnion tenant score. So it's kind of a combination of a FICO type score. And then they throw in some tenant history kind of mixed into their formula, and that's that's one of the scores we rely on. So talk us through more a little bit on the housing portion and any of the magic numbers like, you know, magic number that comes to my head as FHA VA. You got to have a 620 FICO, and I don't know if any of this is still accurate. I'm just going off of old information, I remember. Is there any of those magic numbers in housing that you can kind of talk us through?
Dylan Shively: Yeah. So that's actually a great topic. So there are guidelines and then there are overlays, and I want to explain this for a second because specifically to this topic, it's great. So for example, in VA for a VA home loan, there is no credit score requirement. None. According to the VA, that client can have a four hundred credit score and still technically get approved. That's what the guidelines say. Now the overlays are what the mortgage companies that you're working with have set for their company. So, for example, especially when the pandemic was like super like, you know, blowing up in the housing market when they started raising those minimum score requirements for FHA, when they were saying like, Oh, now it went to six hundred or 620, but then everybody had at least that one person they knew that still do a minimum 580. The reason that one person can do a 580 and the other one does a 620 is because that is the overlays of the business that they work for, the company that they work for so they can set their own set of overlays. So unfortunately, what happens on the consumer side when somebody is trying to get approved and they go to one lender and they say, Well, sorry, our FHA requirements are six 20 and you're a 580, this doesn't work. They immediately put in their brain. I'm never going to get approved until I get there. But it's not true because there are other companies that still have a lower overlay and will accept that five 80. So FHA is 580. Some people you'll talk to will say six hundred or six 20, just understand that that is a overlay.
Dylan Shively: But FHA is a minimum 580. And then to do like down payment assistance, you've got to have at least a 620. And then to go to conventional, you've got to have at least a 640. Now, one last thing I want to touch on those scores is those are the minimum requirements, yes, but I'm about helping people and doing the right thing. Now I'm not saying don't put people in homes because it doesn't give them the best rate, but if you're just barely scraping by to get the approval. You're getting somebody in a house, sure. But did you really help them at that point? And this is where we step in. So one of our requirements as a company, one of our standards is when a client works with us, we work for that client until we get them into the seven hundreds across the board. That is that is what our commitment is to the client. Reason being, if a client is in a situation where a landlord is going to be selling and they have a minimum minimum time that they have to move out and they need to go find another place, we're going to work with the client and let's say they do get approved at that minimum, six 20. That's great. But the client still has us to keep working for them till we get them in the seven hundreds. So then that way, when they do get the higher scores that qualify them for better rates and better loan terms and conditions, they can go ahead and refinance, or they could go ahead and reapply. Based on what their new scores are. And that's just something that we do.
Brad Larsen: Now, do you close the loop on a conversation where we're talking about all the different types and scores, so you kind of feel like, OK, we've talked about the housing, the credit card type situations, you know, what about purchasing vehicles? Because a lot of us, you know, hey, we like to drive vehicles. Is there any magic number? And that's up just to just for fun conversation?
Dylan Shively: Yeah. So again, every bank has different requirements, so there's really no solid score. You know, that's like, hey, the minimum you're going to get approved for, is this because every bank is different? And typically when you're going to get a car and you're trying to get approved, most dealerships use a plethora of banks. Right. So and they all have their different overlays and whatever.
Brad Larsen: So and there's a there's a score for that, too. There's like a yes, is there a vehicle score or what do they call it?
Dylan Shively: Yes. So they do actually have an auto score. Most companies at the dealership or most banks at the dealership are going to be looking at your FICO eight. Now there are because of COVID, there's new, you know, things rolling out almost weekly where they're starting to look at your FICO Auto nine score. Now to wrap all of this up and close it out, the best solution I can offer is just go to the My FICO app or go to their website, whatever. Download my FICO because that will give you all 28 of your FICO scores.
Brad Larsen: You had a really good opinion on Credit Karma. And so I took your advice on that. I want you to elaborate on kind of the differences between those two apps.
Dylan Shively: Absolutely. So now the difference of my FICO and Credit Karma. Let's focus on Credit Karma for a second. So they give you what's called your vantage scores. If you open up the app right now, you're going to see that you have two scores, so you're already missing one bureau. And then what they're doing is they're measuring those scores and those behaviors, the factors, payment history, utilization inquiries, which will cover those last three and a minute. They're measuring all of those factors based on the vantage scoring model, not even your FICO scores. And the reason why that matters is because payment history number one influence at thirty five percent, well, that's actually a 40 percent influence on vintage. So there's a five percent discrepancy. Number two, utilization on the FICO model at 30 percent, that actually drops down a category number three on Vantage at twenty one percent. So there's another nine percent discrepancy correlating that to points just in the two factors that influence your score going up or down. There could be a seventy seven point difference by looking at your Credit Karma app versus my FICO, so. And that's not even going into all of them. That's just giving you the tip there. So it can be so dramatically different. And if anybody is trying to buy a home, if you remember me saying about the mid score, you can't get a mid score when you're only looking at two bureaus.
Dylan Shively: So that's my other thing. And then last thing about Credit Karma is their goal. It's a business. I'm not hating on the business, but their business is to sell you credit cards. They are affiliate partners with each and every one of those lenders that you ever notice. You open up the app, you could go up one point, you go up one point and they are blowing you up to tell you all these very good approval odds that you have for these loans and these cards. Well, you know, don't answer this personally, but for the people that are watching, you ever say, Wow, I have very good approval odds for this. You go and apply for it and you get denied anyway. The reason you get denied is because based on Credit Karma's vantage scores, you'd have very good odds. But then when the actual credit card company or the personal loan company is pulling your FICO Score, that has that big difference in how they calculate your scores, you're now actually still denied. So now you cost yourself that hard inquiry or inquiry however you say it, you now you cost yourself that for no damn reason.
Brad Larsen: As a result of that last episode, I listen to you. We're talking about this. I went and turned off everything with Credit Karma. I canceled that. Then I signed up for my book, My My FICO. So it's my FICO. There's a good app. There's a good, good website you can go to to sign up. I thought that was really great advice. And so I wanted you to elaborate on that because one of the things that I like to do is I buy trucks every year and a half two years know new truck. I'm just, you know, to write off. And I'm that kind of guy. And I always like to know, Hey, you walk into a dealership, you can. You're going to get approved, right? Because every one of us has that little twinge of like doubt. You know, you're sitting there waiting for it to come back. You could be, you know, Bill Gates, right? And you're applying for credit and you're like, I don't know if I'm going to get approved or not, and all of us have that. And it's kind of funny. Even if you're really well-to-do, you still have that little cringe of like, Oh, am I going to get denied? How embarrassing would that be? You know, you make a bunch of money and you get the nine, so I like to keep track on it, plus, you know, there's fraud going on all the time. You don't know if someone's grabbed a credit card or start spending money. And so those those those alert type systems with my FICO are good for everybody to have.
Dylan Shively: Yep, I agree. Plus, on top of that quick tip for the dealership, I tell everybody, you want my FICO just because you're going to know before you walk in there, before anybody pulls your credit, you're going to know you can click. You want to know your auto score. It's going to tell you you want to know your mortgage score. It's going to tell you before anybody pulls your credit and it's directly from FICO themselves. So the last part of this is if you know you're going to buy a car because I'm that person too. Like, I just bought another car about a week and a half ago. You should see my driveway in my garage. I just like cars. I'm a car person. I grew up that way, so I have multiple cars. So what I do is I go to my credit union and if I know typically what I'm going to spend, it only cost me one hard inquiry and I go, and I have that blank check to know I can spend up to this much. So if you're not leasing and you are financing, don't let the dealership convince you, Hey, we send more applications to the bank than you do, so we can get better rates than you can. Or if you walk in with the check and they're like, Hey, if we can match it or beat it, can we get it? No, because they're going to shotgun your credit to multiple banks and now you're going to have multiple inquiries report as opposed to one. And that will also help kind of alleviate the men. I hope I'm going to get approved because, you know, when you're walking in the dealership, you know you're already in there, you know, you're already approved, you know what your rate is. You agree to the terms and conditions. You're happy with the rate and the amount that you have to spend. You're ready to go. Dealerships hate that, but it's the best thing for you and your credit.
Brad Larsen: Great advice. Love it, yeah, there's there's lots I'm sure you can teach more about the credit stuff than we can we can ever fathom or understand. We as property managers again, we have such an opportunity to have a positive influence on people who need just a little bit of nudge, a little bit of guidance and can be turned on to a company like yourselves that can help them because it's all going to come around, they're going to come back to us. And with referrals, they're going to come back to us and rent properties, bigger properties from us and or they're going to turn around and want to buy homes and or investment properties at the same time to include referring their friends and family because we were the ones to help them. So there's a lot of positive influence. And I'm really encouraging. I would encourage you and your company to look at what we do as property management and the property management industry and say, You know what? We need to maybe make a bit more focused effort to get in touch with those folks because, you know, quite frankly, we're we're touching 10 times the folks who your average real estate agent would touch. You know, they're going to touch a few people that get denied and they're going to try and get them credit set up and. And so I mean, there are a few clients, you know, but we have such a it's such a bigger sphere of influence. I'm hoping you guys kind of look at us and say, You know what? We need to maybe find a niche a little bit further in the property management industry.
Dylan Shively: Oh yeah, I agree, because like this is this is the first time I actually spoke to somebody in property management that is delivering it in this way. So that's why we never thought of it, just because nobody's presented it in that way. And the great thing about us specifically is we have we have very, very big volume. So just like you guys, we have a lot of people that are enrolling into our services weekly and we have a percentage of those people that are in situations when they're graduating our program that maybe they prefer to rent, right? They don't want to pay three hundred thousand for the same house that was one hundred and eighty nine thousand a year and a half ago, right? Not everybody wants to do that. Some people, they don't want to maintain their properties. They don't want to be responsible for when stuff breaks and some people prefer to rent, and that's OK. So we have a good amount of people that say, Hey, I want to go somewhere, I want to rent somewhere. Or maybe it's job related where they can't be tied down to a mortgage. Right. So we have a good amount of people that are looking for places to rent. And so we make sure specifically at our company, excuse me, that we reciprocate. So it's not just you sending us business all the time. We're making sure that we have qualified people that would get approved on the credit side for your rental properties that we can refer back over and say, Hey, you got anything for this family, they need this and this and this, you got anything that can fit that.
Brad Larsen: That's interesting. There's a couple of different things I want to talk about in a lot of our application processes. There's there's a big debate going on inside the industry. It ties into fair housing, for example, to kind of give you the left and right on the left. Some people say they'll take the first qualified applicant that applies for a home that meets the minimum required credit that they put on that particular home. And then the other school of thought the right lane is that people want to pick the best applicant. So when you're choosing the best applicant, there's a process through that. It's all fair and legal and all that good stuff. You just have to do the same for everybody. That's really all it is. You just you have to have written guidelines and do the same for everybody. And on the right side, again, with the best applicant, the credit really does matter because if you're looking at three or four or five different applicants, income is king, but credit is queen. And so we always look at that as almost a huge giant deciding factor in a subjective manner. It's not a spit it into a computer, and then the computer spits out the applicant B and there's, you know, 20 different criteria there.
Brad Larsen: But it's very subjective when you go for that route, and it's a little bit of common sense to me. I mean, I know there's you could argue that the you taking the first in the door that meets the criteria is a possibly a safer method, right? But it's also like if it was your home. Who would you want to rent your home? Do you want the person that meets the minimum? You know, barely make three x revenue, barely have an X credit score? Or do you want the person that makes 20 grand a month and has, you know, gigantic, awesome credit and can do everything they want? Obviously, if it's my home, I'd want the ladder. I'd want the person that has the income and then a solid credit. And so just I wanted to give you the background because I'm not really necessarily making a point other than I'm kind of educating you on what is our industry, what we have to deal with and kind of deciding how you want to run a business, how you want your processes to work in the application and leasing side. So it's kind of interesting stuff. What do you think?
Dylan Shively: Yeah, no, man. I agree. And here's the thing I love learning. I love being educated to. I'm a forever student. So the more I get to learn about how you guys operate and what your decision. These are not necessarily in lending, but, you know, getting them approved for the place. You know, that's great. You could get you could give it all to me. I'm very receptive of it.
Brad Larsen: So I would also say kind of closing this up is there's I can see networks implementing this and a pretty good manner. And here's how I would think we do it like we talked about earlier. But let's talk turkey on this. And let's be real, frank. So we're we get all these applications in. We'd like to be able to send folks your way with some sort of either marketing incentive and or discount code. Right. That's a let's be real frank with a team out there. That's a fancy way to say kickback. We're not asking for a kickback, but if we can get our clients a discount code one, you know where they came from and to maybe you can throw us a bone later on, either either you know, doughnuts or actual real dollars, right? Marketing incentive is what they call it. This happens all the time in business. This is this is completely normal because one you want to track where that business is coming from. Two, You can probably help us build up that business to get to you. And three, we want to say, OK, we're going to partner right with your company. We're going to add a section of what you do on our website. And if somebody doesn't work out in the beginning, we're going to say, here's your adverse action letter, but we want you to go talk to this company here. Talk to these folks here. And when you can get yourself squared away in three days, three years, come back and rent from us, we'll be happy to work with you. That's the bottom line, really is what we're looking for. So what do you think about all that? What can we work out?
Dylan Shively: Oh, we could definitely work something out, because that is something pretty standard of what what I do with a lot of agents and loan officers at the moment. So when it comes to the property management side, I have absolutely no issues with doing that because that's very common within my industry. The end of the day, what we're doing is we're helping people, whether it's helping them get into a new apartment complex, renting a new home, buying a home, whatever it is, if we're working together and partnering in that situation to help people, I'm all about it. Right. So there's things that I do. I'll give you some examples, and it may be able to be something we could do to. I do personally a lot of classes and seminars like either first time homebuyer or, you know, just overall becoming qualified or credit one on one teaching people about it and hosting them at places where we want them to buy. So now they're in the place and they're seeing what it looks like and they're getting excited and they're like, Wait. So even if I don't think I qualify now, I have a solution on how to get in there. And when it comes to our partnership, on the money side, we do those things all the time where we'll sponsor events or, you know, we'll say, Hey, we're going to give each and every one of your referrals that come from us and exclusive discount because that is the value of our partnership. So, you know, they could get a special rate on our services to help get them qualified. And I know sometimes agents will say, Hey, we'll reimburse that client in closing or we'll do something like that. There's so many different variations of what we can do. So I'm definitely open to figuring out what we can do to help your, your applicants get into your properties, even at giving them exclusive discounts to work with us.
Brad Larsen: So we can't we shouldn't be shortsighted on just the applicants because a lot of what our need right now for credit repair is with the existing tenants because our marketing team on the sales side and we've been building that up, we've had hired a couple of new agents in the last six months a year and obviously we have a captive audience of tenants, right? They are warm leads. You can call them up and say, Hey, this is so-and-so with rent works and you're currently renting your home with us. What we'd like to do is talk to you about possibly some home ownership opportunities later on down the road. It could be three months, six months because we know your lease agreement is expiring in six months. Right. So let's talk about what your plans are. Do you want to buy a home? Yeah, I want to buy a home. Do you have an agent? No, I don't. Well, great. This is this is an opportunity for us to potentially work together. You know what your credit is? Yeah, my credit's crappy. It's five fifty. Ok, now we need to know now we have an opportunity to say, OK, let's let's partner you up with our team over here. We have a discount. We have a special situation going on with them. They're going to work with you directly in the next 90 days, six months to get you to where you can purchase. And so the other side of that is a as a property manager, as sure would be nice to control that process and hear me out because property managers again and we talk about this a minute ago, they don't want these tenants to buy homes.
Brad Larsen: Well, we want them to because we want them to turn into investors. But we also remember we can control the process. So if we know they're leaving, we can help replace them easier. So the owner that we actually work for and manage the home for, we can say, OK, yes, we we're selling your tenant a home, we're moving your tenant out, which the owner, you know, they might have issue with. But then we turn around and tell them, you know what? We're controlling that we're controlling. When the tenants leaving, we're controlling the early termination fees and then we're going to. Replace that tenant very quickly with a new tenant, so everybody is made whole versus a tenant. What we'll do is is 30 days from from when the tenant is supposed to have their lease. Expired lease expires 30 November. They send you a non renewal notice on one November. Well, guess what? That's the worst time of year to try and rent. And so we actually the owner is getting screwed on that. But if we were there to control that process, we can basically potentially push them to where it's a good situation for the owner. Good situation for the tenant is going to buy a home. So I want to elaborate on that because you may not know that some of our listeners somewhat sort of know that, but it's not top of mind because this is sort of a new topic for us.
Dylan Shively: Yeah, yeah, absolutely. Man, this is great. You have no idea how hard my wheels are turning right now. So another thing I would think of like for the potential for the potential people that are would have an issue with them becoming qualified homebuyers, at least you can know because you have control of this too. Hey. Well, on the applicant side, we've increased the percentage of qualified applicants to replace that tenant that is going to be now a homeowner. So, so you're covering both ends to say, don't worry, we have even more confidence that we can get you a new tenant to replace this one because our percentage of qualified applicants has went up. Right. So we have somebody who's already interested in the property because you could dual market to those people while they're in our program to say, Hey, you're this much closer to getting this property or, you know, whatever it is, you can come up with some kind of creative marketing, so they're getting a discount as an applicant, they're getting a discount as a current tenant. When they want to upgrade and do those things, we can do it on both ends. So now you're increasing the qualified applicants, you're increasing the qualified tenants and you have overall control of where you're placing all of these people that is mutually beneficial for them in your company.
Brad Larsen: And all of this is going towards our bottom line because as you think about property management, you have to understand is we're not real estate agents. Real estate agents ride a roller coaster of sales one year. They could be killing it. The next year they're washing cars to make a living property manager. Companies are very, very steady. So we're like the slow turtle that wins the race. And so I mean, a lot of us in our industry can say we're going to have that much revenue next year, that much revenue the next year because we know what we do and it's at a very steady pace. I'd also encourage you to really potentially look at coming out to the Property Manager Mastermind conference as an attendee vendor. Just because I think this is almost like a coming out party, I don't think there's any real credit type agencies that are honing in on property management. And there's a lot of my fellow peers that want to talk with you and understand, OK, how can I implement this? How can I implement that? Because the end of the day, a five or 10 percent increase makes a big difference for us because again, we're having that steady, slow, you know, it's what do they call it? It's a game of dimes and nickels for us, right? The dimes and nickels they add up, you know, a thousand units under management or five hundred units or 100 units that all adds up every little nickel you add and every little referral you get. All the little five star reviews you get from Google at all adds up to a better type of business. So I'd encourage you to come out to the mastermind conference if you get an opportunity. But to close this loop, I want you to show and tell everybody how we reach you, how we get in touch with you a little bit further to talk more about what you can do for our business.
Dylan Shively: Yeah, so the best way there's two. So one you could get a hold of our affiliate relations manager. We have an entire department that specifically works with our partners or partners to be people that are interested in being partners. So that would be Diana and her phone number is five seven zero nine nine four five eight seven four. You shoot her a text, you let her know that it's from here. From the podcast. You listen here and you're interested in becoming a partner. She can send you everything that's needed. Part two If you want to go to our website, which I also highly encourage, like I push people to look at our reviews, look at what other people are saying about us, look into us, research us and ask us to provide whatever you want. We're an open book. If you go to our website, it's James Warren Group Inc Inc. So James Warren Group Inc, when you go there, you'll see an affiliate tab. You click that affiliate tab, you hit become a partner. You're going to fill out the form quick and then you're going to get an email to get logged in. Now this is the last thing I want to touch on because I think this is very important. This is part of the control piece, so we give every single one of our partners their own personalized portal where they enter in all of their clients.
Dylan Shively: Think of it like a CRM you enter in all your clients every time you put a client in there, we get the notification and someone from our team will reach out to your client within 30 minutes, max of you putting them in. And when you want to in the future, say, you know, you see 20, 30, 50 people enrolled or even one or two, and it's been two or three months. And you want to check on their progress. You can hit the My Referrals tab, see the list of everybody that you've ever sent us. See what part of the process they're in. And you can even view what their progress is when their scores went up, what the new scores are. Things have been deleted. What's been repaired? You can see everything. So then that way on your side, if you start seeing an increase and you're looking at scores that qualify based on what your company approves, then you can say with an intentional follow up call. Hey, Bob, I know you've been in that credit repair program with our partner company for two or three months, and you know, I see some pretty significant progress if you like. I think we could get you to move forward. You guys have complete view. Twenty four seven access of everybody. You put in their progress, their results, everything.
Brad Larsen: So that's kind of another thought I had on the application process. So with the proper disclosures? Ok, key point with the proper disclosures at the time of screening and application, if they get a denial for credit, we could automatically turn them over to you. We could upload them into your system under our name and you guys can reach out to them within that time frame of one business day, 30 minutes and then say, Hey, we understand you were turned down. We want to help you on behalf of rent works, for example. That's pretty. That's neat.
Dylan Shively: Yes. And just as one on top of that, just say, you know, the communication aspect of it, you automatically get an email update every single month when a client has a progress with us. So whether it didn't change, whether it went up, whether it went down, whatever's happening, you get the alert. So that's why we want it registered under you or your business or your company, because then you have full access to see everything. Plus on the organization side, for us, it is letting us know how many people your company has sent. And then when our customer care team is engaging with your client throughout their journey with us, we're always putting you at the forefront. We're always mentioning you, right? So we're always saying, you know, Hey Brad, with so-and-so company, right, whatever or whoever it is that is signing up with us, we're always reminding the client of who you are and what the next process is and what the next step is and how much closer they are. And then we also get to alert you and let you know, Hey, this is what's going on. It keeps us organized. You get full access to everything and you're going to know for sure because this is the thing in the credit repair industry that a lot of people get discouraged if they don't have a way to track their clients because they don'