MELISSA BLOCK, host:

The many Americans who have lost their homes in the foreclosure crisis now find themselves with another problem, one that lingers long after they've moved out: bad credit. It can keep them from getting an apartment, a car loan or insurance. We're talking now about more than 2 million families and growing, which raises an important question: Will lenders and landlords have to change the way they think about those with bad credit?

Here's NPR's Yuki Noguchi with the second of her two reports on life after foreclosure.

YUKI NOGUCHI: In all the years she's been a landlord, it wasn't until recently that Larisa Wells found herself sitting face to face with applicants, asking them about foreclosures and bad credit reports.

Ms. LARISA WELLS: In fact, it's sometimes a little awkward because it's so personal for them. You know, they are opening up their most intimate failures, in some cases, to a complete stranger who is sitting in judgment and deciding whether or not they get a place to live.

NOGUCHI: Wells owns five properties in West Virginia and Washington, D.C., and considers herself a good judge of character. She still looks at the credit score but these days, she also considers whether a person has been steadily employed.

Ms. WELLS: I do have a broader appreciation of foreclosures and what people are going through.

NOGUCHI: There are, of course, large numbers of people who've defaulted or gone through foreclosure and cannot find sympathetic rental agencies. After all, business realities put more pressure on making smarter loans and finding better-quality customers. But it is also true that a record that would have gotten a definite no is now sometimes getting a maybe, at least from some landlords.

That even includes larger operations like Cindy Clare's. Clare is president of Kettler Management, a company that operates 74 apartment communities in the mid-Atlantic region. Clare says in the past, a recent foreclosure disqualified applicants. But speaking outside one of Kettler's properties in Maryland, she says her company now also looks at other measures of financial health.

Clare is also on the board of the National Apartment Association, and says she thinks members throughout the industry are showing more flexibility.

Ms. CINDY CLARE (President, Kettler Management): Relaxing their credit standards a little bit, particularly looking less at bankruptcy and foreclosure - where somebody may have gone into bankruptcy because of the housing market versus just someone that didn't want to pay all their bills, for example.

Again, I think the perception of that has changed dramatically in the last year, and so companies are looking at that.

NOGUCHI: It is still true that next to bankruptcy, foreclosure does the most damage to one's credit, docking as much as 140 points off a person's score. But credit is also not static, and neither is the math companies use to calculate their numbers.

Ms. SARAH DAVIES (Senior Vice President, VantageScore): We have a lot more sensitivity to things going on in the mortgage space.

NOGUCHI: That is Sarah Davies, senior vice president at VantageScore, a competitor to the better-known FICO score. She says their algorithms consider the many different types of mortgages that were available during the peak of the market several years ago. They therefore can, in a sense, grade people on a curve.

Davies says one side effect of that is that even a relatively decent score of 700 represents more risk than it did four years ago. So she says what a score means changes, and so will people's interpretation of them.

Ms. DAVIES: I do think lenders are going to be much more creative in how they're looking at consumers and their credit scores.

NOGUCHI: But how creative they will get in their assessments is an open question.

Katherine Porter is a visiting professor at Harvard Law. Porter has studied what happens to people after filing for bankruptcy. Several years ago, she found people continue to get credit card offers.

Professor KATHERINE PORTER (Harvard School of Law): Basically, they were able to re-enter the credit economy. But that was in a space in which there was lots of capital floating around the markets, there were lots of people looking to make loans. Now, there's very little capital, there's very little money to be lent. People are very conservative. They're going to pick the borrower without that black mark.

NOGUCHI: There are lots of questions about how these black marks will affect behavior in the future, what the social effect of lost homeownership might be, whether those consumers will want to buy homes again, and how long they might have to wait to do so.

Yuki Noguchi, NPR News.

BLOCK: And you can listen to Yuki's first report on life after foreclosure at our website, npr.org.

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