Prior to signing a contract to rent out an apartment, landlords should perform credit checks on perspective tenants. Credit checks allow landlords to obtain a number that is representative of the tenants' ability to pay rent on time. The higher their credit, the greater the probability that they will be able to pay their bills. For landlords, the credit of tenants should be the primary tool by which they judge the quality of tenants. Acquiring a credit report is not as difficult as you might think. Read on for tips on how landlords can check the credit of possible tenants.
Credit checks cost money, so you might want to ask potential tenants to submit money with this application. This application fee is a smart idea because not only will it pay for the credit check, but it will also sort out tenants who are not that serious about the apartment. For a landlord, this application fee is like a natural screener. Obtaining applications also allows a landlord to get information that will be needed for the credit check. In general, this includes a name, address, date of birth and Social Security number.
On the application, you will also need permission from the potential tenants to check their credit. Be sure to make sure they check a box that gives you legal rights to perform this task. This is a necessity due to the Fair Credit Reporting Act. Once you have the requisite information, you can contact a tenant screening company to start the credit check. Tenant Verification Service and E-Renter are two very reliable companies that perform tenant credit checks.
Almost all tenant credit check companies require landlords to sign up for a free membership. To verify that you are a landlord and legally allowed to perform a credit check, you will need to submit some documents. Among these are a property deed, recent utility bill, and your driver's license. All tenant screening companies may not require this information, but the top ones make it necessary. This might seem like a hassle, but you can then be sure the credit score you are obtaining is correct. Otherwise, you cannot be certain the tenant credit check company is legitimate and the score they provide you is accurate.
Once you submit the necessary information, you will receive your credit report via email. When reading the credit score, first take a look at the FICO score. This is the most reliable credit score company and the one used by most lenders to judge risk. Any score above 700 is good, and anything over 800 is excellent. If the potential tenants are in this range, they can be viewed as a good bet to pay their rent on time. If the tenants are under 700, you will have to decide if they are worth the risk.
When assessing the credit report, you will also be able to view things like recent moves. Be sure the potential tenants have not moved frequently in the past year or so, as this could be a sign of trouble.