Tenant Credit

Tenant Credit CheckLandlords Should Utilize a Tenant Credit Check

Virtually all of the  large property management companies obtain the tenant’s credit history as standard protocol in the screening process.  Unfortunately, this is not true with many of the property owner that are operating on a much smaller scale.   However, it very interesting that despite the fact that the large property managers do generally engage in the process of investigating the credit history of their applicants, they still experience far more problem tenants that they should.    This point can be validated by examining the court records across the country which clearly demonstrate that even that many of the big players in property management, really don’t have the best system for screening tenants.

Obtaining a Tenant Credit Check is Only One of Many Steps for Good Tenant Screening

Sadly, there are a number of serious misconceptions that many landlords incorrectly apply to the credit history of a rental applicant. Here are a few facts to consider:

  1. Credit Reports are not always accurate.
  2. Credit History is usually not as comprehensive as it should be.
  3. FICO Scores do  not always factor in judgments and evictions.
  4. Low FICO score don’t  always mean that the applicant is a high risk.
  5. Credit reporting does not necessarily provide the true financial condition of an applicant.

Despite these flaws, credit credit history is important!  The most significant part of the tenant’s credit history to focus upon is the reliability of the rental applicant.  This means that you should always run a comprehensive background check at the same time you are obtaining your renter’s credit history.   This will often reveal to you far more information about your rental applicant than what you will find in a credit report, but not always.   It is not uncommon to find evictions and judgments in the background search that you will never see in the credit report.

Does Your Rental Applicant Have a Track Record of Paying Bills on Time?

If you find evidence that your rental applicant has outstanding collection accounts or has a series of delinquencies, this is a strong signal to you that this individual is probably going to have issues with paying you on a timely basis.