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How to Run a Credit Check on a Potential Tenant – For Landlords
Kristie Lorette Copywriter and marketing consultant, Kristie Lorette is passionate about helping entrepreneurs and businesses create copy and marketing pieces that sizzle, motivate, and sell. It is through her over 14 years of experience working in various roles of marketing, financial services, mortgages, real estate, and event planning, where Kristie developed her widespread expertise in advanced business and marketing strategies and communications.
It is more subjective and requires some judgment calls, but this extra effort will pay off when you have great tenants who always pay rent on-time. The second section of the credit report, the detailed credit history, is the most valuable part of the report for landlords when evaluating prospective tenants. This section of the report allows you to do two important things. First, you will be able to understand what other monthly payments the tenant is obligated to pay. To understand how much in payments a tenant is on the hook for each month, you will simply need to look into the details of the credit report.
Within this block will be a line item that shows monthly payment. Your next mission in analyzing tenants credit reports is understanding their payment history, and whether they frequently pay bills on-time.
Months shaded green were paid on-time, yellow implies that the payment was late and red means that the payment was never made. When looking at each of these sections one for each debt obligation , you are expecting to see long stretches of payments that have been paid on-time. This can give you comfort, but not guarantee, that an individual is likely to pay rent on-time every month. On the other extreme, certain tenants will have such an ugly credit report, that you can immediately stop the screening process.
These individuals likely have poor payment history and a lot of payment obligations relative to their incomes. In the middle, the yellow part of the stoplight, are the tenants who still may be worth renting to, but require some additional questioning to understand the specifics of what happened.
For example, a tenant may have lost his job in the recession of and was unable to pay his bills. While this would have a negative impact on his credit report, he may have gotten a new job and has paid every bill on time since then.
Tenant Screening
These are the gray area situations that require you to gather as much information as possible and ultimately make a judgment call based on what you know. Obtaining a credit report for a prospective tenant used to be nearly impossible for individual landlords. Fortunately for you, the process is a lot simpler nowadays.
You can easily get started screening tenants by using our online rental applications and credit reports.
Top 11 Tenant Screening Services
In several large cities, such as Chicago, New York and San Francisco, the rental market is smoking hot. Tenants in these markets and several others are accustomed to applying for multiple properties before being selected by a landlord. In these hot markets, tenants will often obtain their own credit report to present to every property they are applying for. There are a few pros to using SmartMove that many landlords consider well worth the price.
- RentReporters Partners with TransUnion SmartMove to Better Screen Tenants?
- Get 15% better eviction prediction than a typical credit score*?
- TransUnion Rental Screening Residential History Report?
- Company details?
- Landlord Credit Checks for Tenants | TransUnion SmartMove.
TransUnion is a recognized and reputable company. TransUnion is the go-to company for many real estate teams when looking for credit reports. They use a more real estate friendly version of the FICO score model than their competitors. This is because it does not inflate credit scores.
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The fact that SmartMove is a TransUnion tenant screening product is enough to at least look into it. Full credit report and credit score is given to you. Option is available for tenants to pay for the screening. While this is not a feature exclusive to SmartMove, it is a nice option to have.
Does not provide criminal data for select states. Five states have decided not to allow instantaneous access to their criminal data. These states have realized that they can charge consumer reporting agencies, like SmartMove, to access their criminal data.
Due to this, SmartMove does not provide landlords with criminal data from those states. If your potential tenant is living in, or has ever lived in one of those states, you will not have information on if they have committed a crime there. Instant data often has a few gaps. Database criminal reports have the tendency to in inaccurate. This is because courts and sources are not required to share their records with any particular database. It is easy to find situations where criminal activity is recorded in one database and not another.
Eviction records can also be spotty when receiving instant data. There are many instances where an eviction was filed and appears on a judgement search, but that same eviction does not appear on an eviction search.