Landlords: Why Ordering a Credit Check on Possible Tenants is so Important?
Updated: 10 hours ago
One of the most important aspects to consider when choosing a new tenant is credit checks. In fact, every landlord will be more than happy to know if the prospective tenant is likely to pay their rent on time besides what they claim during negotiations. It is true that checking for credit history and tenant screening incur some costs. However, just because of the cost factor, a landlord should not avoid doing it. To cover that, you can easily charge an application fee on all the prospective tenants.
What information is included in a tenant screen?
As a result of performing a credit history and tenant screening, you will be able to read some specific information about the prospective tenants. That information will inspire you about the prospective tenant so you can decide whether or not to accept him or her.
1. Identification information
This refers to the information such as name, past addresses, aliases, and social security number of the tenant.
2. Credit History Checks
This segment will include information about the bank account for a period of 7 to 10 years including FICO. In addition to that, it exposes credit card information and loan information of the respective tenant. You will be able to see how long their accounts have been open, the history of the payments, their loan limits, etc. as well.
3. Civil Information
Information related to previous evictions, tax liens, bankruptcies, and civil judgments will be included in the public records segment.
This segment exposes who else has requested credit reports for the prospective tenant (for the last 12 months).
5. Criminal Background
Depending on your package, you will have a full picture of your applicant's criminal past. This generally includes searching through our National Databases comprised of over 650 Million court records (updated daily), National Sex Offender, and State/Local courthouses.
Well, as you may notice, a credit report comprises a large amount of data.
Credit Checks for Tenant Screening Suggests Whether or Not to Rent your Property
After reading the credit report, you can decide if the prospective tenant is suitable to be accepted.
Well, if all the indicators including the credit report are positive, that’s a green light. If that is the case, you can proceed to sign the necessary paperwork and collect the deposit.
Once that is over, you can simply hand over the keys to the tenant. Such an approach will allow you to rest easy because you have done your best to keep the troubles away. If the report is not the perfect one but has some positives, you may consider renting out your property under a higher deposit. The deposit can be determined by you. You must explain the reason for a higher deposit in writing.
What if you Deny a Renter Housing due to Negative Credit or other Background Check info?
However, if the report doesn’t give a good impression of the tenant, the best approach is not to rent to the respective applicant, as long as you abide by the Fair Credit Reporting Act (FCRA). Global Background Screening LLC will educate and provide ready-to-send Pre-Adverse and Adverse Action templates to your applicant easily from your dashboard... or let our team of experts handle the process ourselves, once you clearly state you are denying housing to an applicant.
It is mandatory that you let the applicant know (in writing or email) that you found information on a consumer report that does not work with you. Per FCRA, you must provide them a free copy of the report as well as provide a reasonable amount of time to dispute the negative information.
Now that you know the importance of a credit check report and a full tenant screen, you can consider it as a deal-breaker that differentiates great tenants from the rest.
About the Author
Tracy Shatus, a pioneer in the background screening business, has over 20 years experience in the industry. She was the founder and CEO of Global Information Source which was acquired by a larger background screening company in 2017. Tracy is now back in the game as the CEO of Global Background Screening (GBS) and excited to take GBS to the next level.
Tracy holds an advanced FCRA Certification through the Professional Background Screening Association. She is an active member of several local SHRM chapters, keeping up with all the current legislation relating to background screening and is also a member of the Marietta Kiwanis club where she volunteers her time for different outreach programs. In February 2020, GBS moved their headquarters to Johnson City, TN.