Conducting a credit check on your prospective tenant is essential to making sure you will get paid in the future. You want a responsible tenant with a history of fulfilling financial obligations.
To mitigate risk and find a good renter, you may wonder: “How do I get a credit report for a rental application?”
Tenant screening services for landlords help you complete a rental application credit check.
This article tells you what some of your options for credit reports are and how to use them.
With the right resources at your disposal, you can look for red flags on a tenant background check and seek out qualified renters.
What is a Tenant Credit Check?
A tenant credit check is a process that identifies essential information about an applicant, which landlords use to make informed decisions.
To get a credit check on a prospective renter, you need to take specific steps:
- Verify the applicant’s full name, residential address, and employment history
- Get the applicant’s permission to run the credit check
- Choose a credit reporting agency
- Confirm you are the landlord
- Run the credit check on the applicant
- Evaluate the results and notify the applicant
This information lets you know if applicants have the financial means to afford your apartment.
A credit check also helps demonstrate that the tenant has a responsible history of borrowing and paying their debts on time.
How to Get a Credit Report
Once you have the information you need to get started, you can utilize one of the three major credit report bureaus to run a credit check:
These companies typically charge $25 to $75 to run the credit check.
Many states permit you to charge the credit check cost to the potential tenant, but reviewing your state’s laws is vital if you choose to do this.
For example, California landlords may charge an applicant for a credit check, but the fee cannot exceed a certain amount, currently $53.33.
In addition, the total fees charged to the applicant may not be more than those the landlord pays to gather necessary information.
How Long Does it Take to Process a Credit Check?
In most cases, it takes approximately 2 to 10 days to get an applicant’s approval to run a credit check.
Then, the credit reporting agencies typically return credit report results within an hour.
A credit check is always worth the time it takes to process. It provides you with crucial information to decide whether or not to accept a rental application.
Landlords who skip this vital step often find out too late that their new tenant has a long history of evictions or late payments.
What to Look for on a Credit Check
A credit check provides a snapshot of an individual’s borrowing history, debts, and possible creditors. When evaluating a credit report, you will want to look for red flags that may indicate a bad tenant.
Here are some situations to look for during a credit check:
- Late payments for bills, rent, student loans, car loans, and more
- Foreclosure on a previous home
- Eviction history
- Involvement in a personal injury or contract claim
- Conviction of a crime
- Registered as a sex offender
- Low credit score
These critical pieces of information help you decide on who to rent your property to.
Do you want this person living in your room, apartment, or home?
Do the applicants seem like they will pay on time and can they afford the rent?
You can understand the tenant’s history and financial capabilities by closely analyzing the report you receive during a credit check.
Tenant Screening Services for Landlords
A tenant screening service is highly beneficial to a landlord. It is a fast and easy way to look at applicants and determine if they meet your requirements.
Tenant screening services can take care of many tasks you would otherwise have to complete yourself, such as background checks, credit reports, and eviction history.
Many companies may help you perform a tenant background check.
- Experian Tenant Background Check
- Equifax Resident & Tenant Screening
- TransUnion Smartmove Tenant Screening
Summary
A credit check is an integral part of the renting process.
You should have an effective rental application template to get started running a credit check on a prospective tenant.
Landlords can also use our application builder to create a form from scratch.
Let Legal Templates help you create an effective application incorporating authorization to run a tenant credit check.
