If you are a landlord, one of your primary responsibilities will to check the credit of the tenant properly. You should try to find a tenant who will take care of the rented home as they would do if the home were their own. If you can find the reports from any of the credit reporting agencies, you can easily understand the ways in which your tenant is managing the money.
Steps before Credit Check:
- Obtain A Complete Application: You can provide a printed application form for filling up the personal details of your tenant. The form may include essential points like birth date, full name, previous address, previous landlord name and contact information, Social Security Number etc. The form should also say that you want to run a credit check of your tenant. A place of signature of the tenant should be kept to sign the consent for allowing you to run the check.
- Credit Check Fee: You are required to pay a fee to the credit report bureaus for running the check. Therefore, you must collect the fees from your potential tenant well beforehand.
What to Look on Credit Report:
As soon as you have the credit report in your hands make sure you focus on the following points
- Negative Sections: There can be various negative sections or some sections which are potentially negative in nature. You will generally find the negative sections right on the first page of your credit report. Just try to go through the details of the accounts which are due or discharged.
- Individual Credit Loans and Accounts: When you are running a credit check for renters, you must also go through the individual loans and accounts. The late payment accounts can be reviewed. You should notice the number of times there were late payments in the accounts. The report also tells you that for how many days the fees were late, such as 30 days, 60 days or 90 days.
Differentiate Good and Bad Tenants:
You must know how to differentiate good tenants and the bad tenants. As the past behavior can predict the behavior in future, you can easily differentiate different types of tenants. If they have the tendency of paying late, they will continue with their behavior of late payments, which may not be suitable for you. But sometimes people take lessons and change. If you can observe that the late payments are very old and recently the tenant have started paying on time, you can consider providing him an opportunity.
Can Tenant Provide A Credit Report Copy?
Tenants may have applied for several properties and will get exhausted on paying the credit check fees to all the landlords. Instead of this, he can easily pull his own credit report for your convenience. Though Federal Law does not allow pulling the credit report by the tenant himself, some state laws are less restrictive in this matter.
Whenever you are selecting tenants, you are free to run the credit check legally. You must request for the consent from the tenants before running the check. Federal laws allow you to keep the required information from the credit report while discarding the rest.
Besides running the credit check, you can also contact the previous landlord for screening the tenants properly. You can verify the information provided by the tenant with the previous landlords. The information can be the rental fees, occupation dates by the tenant and whether any issues were present between the landlord and the tenant. So, the credit checks can prevent you from potential damages.
Author Bio: David Houston is a Property expert. In this article, he is providing tips to the landlord for running credit check for renters.