Accessing Tenant Credit Reports
Nowadays many landlords will check the tenant credit report before agreeing to rent to someone. This is because this practice lowers the risk of them renting to someone who has a high debt to income ratio, has past collections, or has an extensive history of late payments. Learn how checking the financial history of a rental applicant can alert you to the potential problems of a future tenant.
Before the Credit Check
Before you can check a potential renter’s credit report, you will need to ask them to complete an application. There should be a space on the application where the potential renter puts in their Social Security number, current address, full name and date of birth. The Social Security Number must match the name on file at the credit bureaus for a credit report to be returned.
Even if you already have a person’s Social Security, you still will not be able to run a credit check without the rental applicant’s permission. The two ways that you can do this is to either put in a permission clause somewhere in the rental application, or to provide a separate form for this purpose. Whichever option you choose, you will need a signature from the applicant that expressly allows you to check their financial history.
Defraying the Costs of Credit Checks
Performing a credit check for an applicant is not free. However, you could pass the cost of the tenant credit report onto the rental applicant. You will need to know which type of credit report you will need. At this time, landlords can order a credit report through Smart Move and receive the full credit report with FICO score (you and the potential renter have to have an email account and this does require action on the renter’s side), or you will need to choose a tenant screening service such as StarPoint Tenant Screening. The benefits of choosing a tenant screening service includes free membership, you only pay for the reports you order and you can order 24/7 tenant screening.
While performing credit checks on potential renters are a good way to protect yourself against people who can’t or won’t meet their financial responsibilities, a bad financial report doesn’t say everything about a person. Good and responsible people go through rough patches all the time. Use the combination of a credit report and score, current ability to pay the rent (such as a new job), and other screening reports such as a criminal background check or eviction search to discern whether a person will be a great tenant for your property.