Credit Reports for Landlords
How important is running a tenant credit report?
As a landlord or real estate representative, there are several things you should consider when screening a potential tenant. Though eviction history, criminal records, and proof of income are important facts to know; the tenant credit report is actually the most important. Why? Because tenant credit reports are a direct indicator of responsibility and liability.
By running an extensive tenant credit report, you can easily decipher if the potential candidate can be held liable for their rental agreement. For example, if the potential tenant has a long history of debt, charge-offs, or has filed bankruptcy in the past, they are probably still dealing with all of these problems now. Whether it be paying down that debt or their irresponsibility with their finances, you can pretty much expect that these problems will come into play with your contract. They may be late, not pay at all, or write you checks that bounce month after month. Are these headaches really worth filling your unit out?
Tenant credit reports also gauge your tenant’s responsibility. If they have a low credit score, this could be an indicator that they live irresponsibly and thus, will not respect your agreement or your valuable property. Think about it. If they didn’t care enough about their finances to let their credit score fall so low, what makes you think they’ll care about your property or your rental agreement?
As a recommendation, we suggest running a full credit check with FICO score on every potential candidate and then going off of these facts rather than just “winging it”. Then, if you find the potential tenant has a credit score of less than 620, we advise taking all of the other factors into play before making your decision because more often than not, their credit score is low for a reason rather than it being the result of “a couple of accidents when they were young”. Remember, it always pays to do your research and do your research right.
For further information about credit reports or how to use them, please call us at 1-800-252-8297.