The Importance Of The Credit Check For Landlords

“The Importance Of The Credit Check For Landlords” written by Mike Marko

Are you struggling with tenants that aren’t paying rent on time, or have a large turnover of tenants every month?

This can be a common issue when you don’t have consistent ways of how you screen your tenants.

Perhaps, you are doing the tenant screening the wrong way.  Aside from ordering the necessary reports of your tenant’s background check and interviews, if you’re not checking the tenant’s credit report this could be something that you should add to your screening process to help you in choosing the right tenant.

Whether you are familiar with a credit report or not, knowing the correct process of checking and evaluating the prospective tenant’s credit is essential to the successful property manager.

I will help you to understand how the applicant’s credit could affect the rental application. So without further adieu, here’s the article about the importance of credit check for landlords.

Simple Guide: Credit Check For Landlords

One of the main priorities of property managers is to choose the right tenants to occupy the properties they are renting. Finding the right tenants are those who will pay their rent on time and be taking care of the rented property is every property managers’ ultimate goal.

What are the key points needed to be addressed when finding the right tenants?

The easiest way to know the applicant’s capability of being a good tenant is by conducting a background and credit check.

A background check can give you an insight into how the prospective tenant will behave inside your property. A credit check will show you the way the applicant spends money and other financial behaviors that only a credit check can reveal.

For $19.00 up to $40.00, all of the three major credit bureaus could give you the credit report of your prospective tenant.

What are the Best Credit Services Available?

There are hundreds of online companies that do credit checks. However, all of those companies use the information from the 3 major credit bureaus. So my suggestion is to go directly to the source of credit reviews and use 1 or all 3 of the major credit bureaus for doing your tenant credit check.

The three major credit bureaus are Experian, TransUnion, and Equifax.  They all present different scores, format, and ways they analyze a person’s credit for making up a credit report. The decision is up to you which among these companies are you going to use and to better help you, here is the difference of each credit bureaus.


Experian is the only legit company that is offering a free tenant credit check to any landlord. They evaluate and score credit according to a proprietary formula. Although they offer a one-time free report, for your property management screening process you might have to pay for their services to get the most detailed reports from them


TransUnion will charge you $30 per person for using their services. The cost of their service is pretty reasonable because aside from the credit report, they will also give you credit recommendation and criminal background check of your prospective tenant.


Equifax will charge a minimum cost of $16.00 for requesting a credit report. However, a full and detailed report that includes a full credit check and criminal background check cost $29.00.

What Do You Need Before Conducting A Credit Check

Here are the things that you must remember before conducting a credit check.

  • Complete Rental Application

Before conducting a credit check, make sure that the applicant has already filled out a complete rental application form. The application form must contain the prospective tenant’s legal name, birth date, Social Security number, previous address, and landlord contact information for the past two years.

The rental application form should also indicate that a credit check is required. Depending on your rental laws and regulations, you might need to get a separate authorization form signed by the tenant to run their credit check.

  • Collect A Credit Fee From The Applicant

Charge the applicant for the money that will be spent in conducting a credit check. It’s completely legal but make sure that you will only use the money to order credit reports.

It is ok to charge more than the credit check if you are doing additional background check services and disclose this on your applications and forms that they authorize.

What Do You Look For When Checking A Credit Report?

Once you already have the credit report of the prospective tenant, look for possible red flags in each section.

  • Negative Items

Usually, credit reports have the negative items on the first section or page. Expect to see any accounts that are past due, discharged, or in collections.

  • Bankruptcy, Eviction, or Foreclosure on a Home

These items could also be found on the first page of the credit report. If not, these items are placed next to the accounts where it belongs.

  • Individual Credit Accounts and Loans.

Review each account and look for late payments and if there are late payments.  Check how many late payments are listed. Also, check the length of the late payments.

When finding out negative information on the credit report it is always best to interview the tenant and allow them to explain why these items are on their credit report.

How Can Credit Check Tell If The Applicant Is A Good Or A Bad Tenant?

Credit reports and credit check are excellent ways of predicting future behaviors based on past spending and financial behaviors.  If the applicant has a history of not paying rents on time, this bad habit will most likely continue in the future.

This is how important credit check for landlords. Background and credit checks tell the financial history of a tenant and can help you predict what financially could happen if ever the tenant was accepted. Though the reports are not saying it directly, it will give you a hint and you can make your own conclusions from the information provided.

Just a reminder, don’t just reject applicants because there is a late payment on their background and credit report. If the late payments happened a long time ago and the current bills are paid on time, it just means that the applicant has already made a solution for the mistake. Always interview tenants and allow them to explain bad items on their credit check as this could be the difference in renting your property.

Final Thoughts About The Importance Of The Credit Check For Landlords

Just like the background check, a credit check is also an important part of tenant screening. If receiving rents on time or avoiding evictions is your goal then you need to take the time to understand the credit check for landlords. Remember that one of your goals is choosing the right tenants only to rent your properties. The future of your property still lies on the decisions that you are making and your tenants are one of it.

So make sure you consider a credit check for landlords when you receive new applicants.

Make sure you comment below if you have any questions or comments.




Suggested Articles:
1. Tips For Choosing The Right Tenant
2. How A Tenant’s Background Check Affects Renting A Property
3. What Is A Consumer Credit Report?

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Article: The Importance Of The Credit Check For Landlords

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