Landlords typically look to see that a prospective tenant makes at least three times the income compared to rent. Derogatory marks may indicate that your prospective new tenant is not financially responsible.
Derogatory marks could include:. If your applicant owes an outstanding debt to their previous landlord, then it may be a red flag and indicate that they could fail to pay rent when living in your property. You should consider asking prospective tenants to submit a rental history report in addition to running a credit check.
Always consider reaching out to legal counsel familiar with credit checks and tenancy laws. Give some careful thought to reaching out to legal counsel familiar with credit checks and tenancy laws, but generally, there are multiple ways to check credit that include the following:.
Some would-be tenants may show up to rental showings with their own credit reports. However, this report could be fabricated and contain inaccurate information. Familiarize yourself with credit report-related laws and consider reaching out to legal counsel with any questions.
In most cases, this is generally only a viable choice for landlords who have multiple units to rent, and requires a lot more time and effort to complete. Pulling traditional tenant credit reports usually requires landlords to follow a lengthy process, which may include a landlord identity check, a background check into your business, and a property inspection.
This method may prove to be too burdensome for independent landlords, who typically have fewer renters. When it comes to making leasing decisions, you may find it less than ideal to rely on a renter-provided credit report nor jump through the hoops required for using a credit reporting agency.
Landlords require trustworthy information in order to make an informed decision. Using SmartMove is simple, convenient, and fast. SmartMove screening only takes a few minutes compared to traditional background checks which can take days or weeks.
During those weeks of waiting you lose valuable time looking for other tenants causing you to lose out on rental income during a vacancy. With SmartMove, there are no rental on-site inspections required either so you never have to worry about jumping through hoops to get the answers you need. And finally, everything with SmartMove is completely online. Simply set up a free account, provide SmartMove with the applicant's email address, and then get the reports delivered.
With pay-as-you-go pricing, you only pay for the screenings SmartMove conducts rather than paying a costly subscription fee that may be unnecessary if you only have a couple of properties or just a single one. A credit check is a basic but essential part of your screening process as a landlord, so you should do your due diligence.
For example, you might want to ensure that the potential tenant can pay and afford the rent by asking for recent pay stubs, W2s, and a letter from his or her current employer. Pro-tip : In the absence of credit history, you might also consider requiring a larger security deposit or advanced payment of rent.
Cosigners are legally required to pay the rent if the applicant fails to do so, but it could depend on your jurisdiction and the terms of the agreement. Find out more about getting the best chances of renting if you have a poor credit history.
Your Credit Score is yours to see and yours alone. Each CRA should return the same public information about you, regardless of which one is checked, but not all will return your rental payment information.
For this they may require proof of income and possibly contact your employer to make sure your annual salary can comfortably cover rent payments — usually it is required that your combined annual income if renting in a group comes to at least three times the annual cost of rent. A former landlord may also be contacted to make sure that rent was paid on time to establish whether you are a high, medium or low risk. In some instances, they may even ask how much of your previous deposit was paid back to you to get a feel for how well you managed to look after previous properties.
Not only will your report show you if there are any errors being reported by the Credit Reference Agencies, but our professionally qualified Credit Analysts will help resolve any issues you might have.
If you have a County Court Judgment CCJ in your name, it can have a serious impact on your Credit Score and ability to borrow for the entire time it is active, as well as potentially affect the outcome of the checks carried out by prospective employers, landlords and insurers. There are several different reasons you might need to print or share a copy of your Credit Report, such as assisting a mortgage advisor during an application, showing a specific entry to a lender, or even just to keep a physical copy for your personal records.
What type of search is carried out? Can a landlord see my previous rent payments? It ranges from to , and purports to indicate the risk that an individual will default on payments. High scores indicate less risk. Generally, any score above is considered a medium risk or less. Another type of credit score is VantageScore. Credit reporting agencies created this score to compete with FICO scores.
Don't put too much value in a high credit score—it doesn't reflect the many other good-tenant characteristics such as ability to get along with neighbors and take good care of your property that are very important.
To run a credit check, you'll need a prospective tenant's name, address, and Social Security number or ITIN Individual Taxpayer Identification Number , which will typically be on the rental application or consent to background check forms you ask prospects to complete. The application is also the place for applicants to authorize you to run a credit report.
Be sure to tell prospective tenants the amount of any credit fee you are charging discussed below. As linked above, each of these credit bureaus offers tenant screening services that include credit checks.
You can order the reports online and receive them immediately. Another popular option is to have a service request a credit and screening report from your tenant. Doing so avoids your having to collect a credit check fee the service charges the applicant and potentially sensitive information such as a Social Security number. Most of the time, you simply register an account online with the service, and it will send the applicant instructions for how to order the report and allow you to receive it.
The service notifies you when the report is complete and tells you how to access it. Many of the credit bureaus provide this option, as do other landlord-oriented websites such as Cozy and TurboTenant. It's legal in most states to charge prospective tenants a fee for the cost of the credit report itself and your time and trouble.
California sets a maximum screening fee and requires landlords to provide an itemized receipt when accepting a credit check fee. Be sure prospective tenants know the amount and purpose of a credit check fee and understand that this fee is not a holding deposit and does not guarantee the rental unit. Also, if you expect a large number of applicants, you'd be wise not to accept fees from everyone. Instead, read over the applications first and do a credit check only on those who are genuine contenders for example, exclude and reject those whose income doesn't reach your minimum rent-to-income ratio.
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