One of the most important things you can do as a landlord is to run a tenant credit check on anyone who is interested in renting with you. If you're new to screening tenants, here's everything you need to know about running a tenant credit check:
The Importance of a Tenant Credit Check
Potential tenants may provide their own information, but you have no way of knowing if that information is accurate or if tenants have omitted important details unless you run a tenant credit check. Financial considerations are one of the few reasons you can deny tenants housing under the Fair Housing Laws, so running a tenant credit check gives you grounds to make a decision on whether to rent to a tenant. If a tenant has a pattern of missed payments and a poor credit score, you may want to consider charging a higher deposit, requiring a co-signer or finding another tenant.
What You'll Need
The Fair Credit Reporting Act has specific requirements in place if you want to run a tenant credit check. First, you must have the potential tenant's permission to access his credit report. Many rental applications include language granting you permission to run a credit check, while others may lack the proper language, in which case you'll need to use a separate form. Make sure you have the tenant's explicit permission before running a check.
Get complete personal information on the tenant, including current address, date of birth and social security number, to ensure you have the information you need. Finally, make sure you keep all sensitive personal information locked up, either in a locking file cabinet or in a locked room, to protect it.
Use Experian to Cover All the Agencies
Experian offers a credit report that covers all three reporting agencies; Equifax, Experian and TransUnion. This is the most comprehensive tenant credit check option because some creditors report to only one bureau. Unless you pull a tenant credit check from all three bureaus, might miss important information about a tenant's credit history.
Consider a Tenant Screening Service for More Information
Running a tenant credit check through Experian or directly from one of the other reporting bureaus gives you information about the tenant's credit history, but you may be missing other important information. Some landlords prefer to go above and beyond the tenant credit check to run criminal background checks and request eviction reports in order to evaluate potential tenants thoroughly. If you prefer this comprehensive approach, consider a tenant screening service, such as Tenant Verification Service.
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