How to Run and Understand a Tenant Credit Check

A tenant credit check is one of the real estate investor’s most valuable screening tools. Credit reports provide a broad overview of an applicant’s financial state—before you give access to your rental property. Do they pay their bills on time? Are they underwater in consumer debt?

Ignore the temptation to glance at the credit score and give a thumbs-up. Clues into an individual’s behaviors lie behind that number, and they’re vital to the tenant screening process. Landlords and investors can look at the information included on a credit report to get the best insight on a rental applicant’s financial stability and bill-paying history.

A history of late payments or outstanding balances may indicate that the individual will make late rent payments. Outstanding or unpaid bills are red flags, too.

What Can a Credit Report Tell Landlords?

A credit report provides information on an individual’s financial and bill-payment history.

A full tenant credit report will give details about:

  • Trade lines: The type of account, date opened, credit limit or loan amount, account balance, and payment history.
  • Credit inquiries: Any time a copy of a credit report is accessed, it appears as a credit inquiry.
  • Public records and collections: Information from state and county courts and overdue debt from collection agencies, bankruptcies, foreclosures, suits, wage garnishments, and liens.

A FICO credit score provides much less information. In short, it’s a number assigned to individuals based on information on their credit report. Useful shorthand, but not always the big picture. However, an applicant’s credit score is fairly straightforward and easy to understand, so a lot of landlords default to it. But in reality, it’s not the best way to measure someone’s financial ability.

A good FICO score indicates that someone likely can pay rent—but a bad credit score isn’t good evidence that they can’t.

Purchasing your first rental property is just the beginning of your real estate journey, because being a good landlord is almost as important as making good deals. BiggerPockets’ free guide How to Become a Landlord: Managing Rental Properties for Real Estate Investors will teach you everything—from setting rent to handling evictions.

For example, imagine a tenant who lost their job due to reasons beyond their control, such as a layoffs. While unemployed and struggling, they missed a few bill payments. That doesn’t necessarily make them a huge risk, despite their lowered credit score.

Some landlords require a minimum credit score to qualify. Others prefer a more extensive tenant credit check. There’s no right or wrong answer—it depends on what works for you and your business.

How to Run a Tenant Credit Check

There are a number of services and options available to access your prospective tenant’s credit report. You can run credit checks online with your applicant’s permission (typically provided on a rental application). Alternatively, ask your applicants to order their report and provide you with view access. An online tenant-screening service can provide instant results, too.

The three major credit bureaus all service landlords, and pulling a report won’t run you much.

  • Equifax offers a full tenant screening report, including pulling credit reports from all three bureaus and running criminal background checks and eviction reports.
  • Experian’s no-fee tenant credit check service provides basic financial information.
  • TransUnion’s SmartMove screening service provides basic background and credit information.

What information do I need to run a credit check?

Here’s what you’ll need to know about your tenants to run a credit check:

  • Full legal name, as well as any variations (like a maiden name)
  • Previous addresses for the past two years
  • Social security number
  • Date of birth

Some credit check companies may ask for additional information. Make sure you know exactly what information your service needs beforehand.

Additionally, some services—like Cozy—allow prospective tenants to input their information themselves.

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