Guide And Tips On How to Get Credit Report For A Potential Tenant

“Guide And Tips On How to Get Credit Report For A Potential Tenant” written by Mike Marko

“How Do I Order a Credit Report of a Tenant?”

You’re probably thinking about that question a lot…

And that is why you’re looking for answers on the internet.

Well, you’re lucky because you found this article about how to get credit report of your prospective tenant. I will talk about what you need to know about the renter’s credit report and how it could affect your decision in evaluating a rental application.

Get Your Tenant’s Credit Report

When sorting through applications you are always looking for red flags or things that will elevate one applicant over another. When you find the most qualified applicant then renting the unit runs easily and smoothly. The first part of tenant screening is making sure you get the authorizations needed to run the rental applicant’s credit report.

According to the law, property managers or landlords or property owners are allowed to put all applying tenants through a fair tenant screening process. The fair screening process starts with disclosures of what you will be looking at to determine if you will rent to the applicant or not. After receiving written authorization from the prospective tenant you can then begin and complete the rental background process that could affect the rental application of the prospective tenant.

It is important to know the importance of the reports that are included in the tenant screening services especially the credit report. Credit report could help you know the financial status and capabilities of the applicant. In fact, their credit report can give you an insight if the applicant has the capability of being a good tenant in reference if the tenant pays their bills on time and has the financial means to rent the unit they are looking at..

How can a credit report help you in knowing the applicant’s financial status and capabilities? Let’s find out!

What Is A Credit Report?

Every individual who has a bank account, credit cards, loans, car payments or anything financial related will generate a credit report.

A credit report on any individual contains all of the credit activities, accounts, debts, bankruptcy and everything that is related to money and how historically that individual has handled their financial accounts. A good credit report would have very few missed payments, no unpaid obligations and an excellent credit score over 700+. For most property managers, an applicant with good credit report is the ideal tenants because it is evident that they are capable of paying monthly rent. Applicants with negative items on their credit reports and a credit score less than 700 need further investigation or references from their previous landlords.

You also should interview the tenant to determine the lower credit score to see if is bad financial history habits or a one time issue.

How To Get A Tenant’s Credit Report?

Obtaining a credit report begins with the disclosure that you will be checking the prospective applicant’s credit. You then must have the applicant sign an authorization for you to receive, run and review their credit in the rental screening process.

Disclosure and signed authorization help you legalize the rental screening process. You can’t just order a credit report for an individual who called you and asks for inquiries about your rental property business. Running credit without signed authorizations could open your property management firm to legal action because you violated the tenant’s rights and you need to avoid making this mistake.

The applicant should submit a rental application first before you could ask anything about ordering a credit report. Having the application allows you to verify all the financial data against the rental application. If you find there are major discrepancies then the applying tenant could be trying to rent the unit using fraud or other illegal means. The agreement should be legalized with signed authorizations because you are about to acquire important private financial information about the prospective tenant. Since you are the one who requested the reports, it is your responsibility to take care of it and make sure that the information will not be leaked or misused.

In order to avoid a bad tenant or a less qualified tenant then other applying for the rental, you must understand what you are looking for in credit reports and credit scores as well as learn the importance and the reason why you need to carefully examine the prospective tenant’s credit report.

Guides And Tips In How To Get Credit Report

Credit reports should always be obtained from the major credit bureaus Experian, Equifax, or Transunion. These credit bureaus have the most up to date and complete financial history and information on any individual in the USA. When ordering a credit report there are some guidelines you should follow before ordering a credit report to avoid any legal problems.

  1. Whenever you are posting an advertisement about your rental property business. Don’t forget to include a notice that the most recent credit report is a requirement in renting your property. When the prospective tenant inquires about the property, be specific if you will take a credit report from the tenant or if you will order the report for them.
    There’s a big difference between the two decisions. Rental properties are in higher demand than ever, and since there is a lot of competition for applicants credit documents could be easily faked. Since you can charge the prospective tenant when you order for their credit report, it is advisable to personally order the credit report rather than using the provided document from the applicant.
  2. The applicant should complete a rental application form, and sign an agreement or authorization to run their credit before you could order a credit report.
    When ordering a credit report you need the tenant’s basic information such as legal name, home address for the past two years, social security number. It is our recommendation that you also get the applicant’s employment information and use that to help verify their identity.
  3. When running an individual’s credit during the tenant screening process it is legal to charge the applicant for the cost of ordering a credit report. Credit reports usually cost from $20 to $50. It’s recommended that you receive and cash the check prior to running the report to avoid any non-payments during the process. Also requiring a personal check to run credit also allows you to verify the identity of the applicant further.
  4. Avoid using anonymous websites on the internet that offers services about tenant screening or ordering a credit report. When running a credit report you want the most recent and complete financial data and history, and that is found using the websites of the three major credit bureaus, TransUnion, Equifax, and Experian. Each of the three major credit bureaus will produce different credit reports and credit scores but all of them will have the same items. It’s recommended that you do a 3-B or a three credit bureau report to get the most detailed analysis of the tenants past, present financial history. Ordering a credit report is easy when using the 3 credit bureaus. You just need to fill the required fields with the applicant’s name, address, and social security number. Additionally, it is easy to pay the fee to run the credit report online with a company credit card.
  5. Evaluate all of the credit scores and the combined score if you do a 3-B report so you can understand where the applicants financial status stands against other applicants. Sometimes, the credit score is the decision-making basis when determining between multiple application on who will be chosen to rent the property.

6. Print the credit report and have a secure location in your offices to store the reports and applications. The credit report includes notes about the applicant’s entire credit activities for the past 7 years. You can learn about how the applicant uses credit cards, pay debts, money in the applicant’s bank account and remaining amount of debts will also be included in the credit report. All of this information is important to you because you are entrusting a person to rent your property and provide monthly rent. Additionally using the credit report to determine the best or most qualified tenant to rent to is often the best way to sort through large amounts of applications for rentals quickly.

7. If you reject an application, it’s important to tell the applicant the reason why you are not approving their rental application. It is the applicant’s right to know the factors that affected the rental application. Just don’t be rude in telling the reasons why the applicant is rejected. If possible, recommend the applicant to other landlords or property managers. You should check with a lawyer in your area to make sure that you follow all laws and reporting when rejecting tenants to avoid any legal action against your company.

Final Thoughts About Guide And Tips In How to Get Credit Report For An Applying Tenant

We’ve just covered how to get credit report of your prospective tenant. I talked about what you need to know about the renter’s credit report and how it could affect your decision in evaluating a rental application.  Be sure to follow my tips and guide on how to get credit report for potential tenants to help ensure that you are covered legally.  You can get yourself into trouble if you don’t follow the process properly.

The credit report is a key tool to help you screen potential tenants.  

If you have questions or suggestions, leave them in the comment box below.




Suggested Articles:
1. Marks Of A Good Rental History Report
2. What Property Managers Should Know About A Tenant Background Report
3. Important Factors In A Tenant Screening Report

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Article: Guide And Tips On How to Get Credit Report For A Potential Tenant

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