Tenant Screening and Credit Checks: What You Should Know
Found a perfect place to rent?
Your property manager may ask you to complete the screening process, so he or she may ask you run a credit check.
Whether you’ve got great credit, bad credit, or no credit, credit checks probably make you a little uneasy. What if there’s a problem?
Credit Check
Landlords and property managers can legally screen you as a potential renter, and the screening process often involves a credit check. However, you must give your permission in writing or submit required information online. Your signature on the rental application may count as written permission, or you may be asked to sign a separate credit screening document. Online tenant screening process cut shot all these processes and signatures. Landlord can initiate a request online for Tenant to submit personal identity information securely.
Property owners generally check credit using services offered by tenant screening services, and major credit bureaus or by asking you for a physical copy of a report. Be prepared to give the landlord the following information if they intend to order the report:
· Full name
· Address
· ·Email Address
Landlord initiates online application by submitting your details for a fee either paid by tenant or landlord. Online tenant screening is performed as soft, there is no negative impact on your credit score, however credit report hard inquiry performed by offline which may cause a slightly negative drop in your credit score.
Tenant screening Services
What landlords check in a rental screening varies. Some may check only your credit score. Others may require more information. Depends on landlord choice of selection for the type of report, reports
frequently include various reports and details:
· Standard credit reports
· Credit scores or credit ratings
· Criminal and sex offender background checks
· Residence and eviction histories
· Employment verification and histories
Some landlords may also check your public bank and legal records and even dig into your social media profiles to uncover anything they’d consider unacceptable.
The format of these reports depends on the company supplying them, but in terms of credit information, a report should generally contain the same credit details you would see if you ordered your own credit report.
Here’s what landlords usually see in standard credit checks:
· Loans (current and past)
· Bankruptcies, foreclosures, and short sales
· Minimum payment amounts for debt accounts
· Late payment histories
· Credit histories
· Credit scores
Problem with My Credit Report
Many landlords consider credit one of the most important parts of making a leasing decision. What credit score is needed to rent a house can differ from landlord to landlord, but you can expect the minimum to be somewhere between 600 and 620.
Certain items may be deal breakers for property owners, however. These could include the following:
· Car repossessions
· Credit card charge-offs
· Accounts currently in collections
Other things that matter to most landlords besides credit include income, criminal history, and eviction history.
The score a landlord receives may be a slightly different number from your personal credit check, but all credit scoring models generally take into account the same five factors:
· Payment history
· Debt amount
· Account mix
· Credit history age
· New credit accounts
With your own credit report in hand, ask the property manager or landlord to review the report and see whether it’s worth it for you to apply.
Landlords know that renters usually don’t have perfect credit. Often the biggest concern is whether you pay your rent-on time. Historically, information about rent hasn’t been included in standard credit reports and confirming on-time rent payments can be a tedious process of contacting former landlords.
When tenants pay rent using online platforms, the payments get reported to Experian—and TransUnion also reports rental payments when available. However, landlord have to sign up for one of these services for your rent payments to be included in your credit file.
If you feel that there is even the slightest chance you may not pass a rental credit check, there are a few things a potential tenant can do that will hopefully improve your chances.
1. Find someone to co-sign for you so the landlord has a guarantee that they will get the rent payment, even if you were to default.
2. Be completely honest and up front with the landlord about your finances and show them the progress you have made regarding paying your debt and rebuilding your credit.
3. Offer to pay the rent in advance or offer more for the security deposit to show good faith and your intent to pay what you owe
4. Make sure to show the landlord solid proof of your monthly income or offer to allow them to take the rent via direct deposit
5. Pay a bit more for monthly rent as a compromise. However, this would probably want to be very last on your list of things to do
Landlords are always looking for that perfect tenant, so they have little to worry about especially when it comes to their rent being paid on time. Either as a potential tenant or a landlord, you should educate yourself and always be aware of different scams that may be going around. Federal Fair Housing Guidelines, as well as the standards of tenant screening, should always be followed and adhered to, and if there are any red flags, you should dig a little deeper for more information.
