Around 36.6% of people in the United States are renting their homes.
That's great news for any property owner! The only problem with so many people renting is that you may have bad tenants trying to live in your properties.
How can you prevent this from happening? By learning how to do a credit check, of course!
Keep reading to find out a little more about what it takes to get a good credit report on a potential tenant and how it can help you in the long run.
Get a Complete Rental Application
Before you can do anything with a potential tenant's credit, you need to gather all of their information with a rental application. This gives you the chance to learn more about them, such as their name, their previous address, birth date, current employer, and much more.
Part of this application should include that you are going to run a credit check on the tenant. Be sure to have the applicant sign their name stating that they consent to this credit check as well. Screening applicants can be very useful later on when deciding if you want to rent to them or not.
Find the Service for You
Unfortunately, landlords are unable to get a credit report straight from the credit bureaus. You will have to work through a service that will help you get access to that information.
Find a company to work with that is local to you and has been around for a little while. You also want to be sure that the report they give you is easy to read and understandable, but also telling to the potential tenant's history.
In some situations, you may be able to find a screening company online that can help you. Be sure that you also check out your local or state apartment association to see if they can offer services as well.
A lot of credit reporting agencies are able to give you the credit reports for potential tenants on the same day you request it. The cost of the services will depend on how many you are getting in each month.
Want to Know How to Do a Credit Check?
Running a credit check on someone means that you will get a ton of information about them. You can learn about:
- Past late payments with rent or bills
- Crime history
- Eviction history
- How long the person has been financially active
- Previous bankruptcy filing
- FICO scores (in some states)
The information you get from a credit report is going to cover everything from the past 7 to 10 years. This will give you a lot of great insight into how the person could be as a tenant for you in your property and can help you with making an informed decision.
Remember to Verify Everything Else
Aside from the credit check, you need to be sure that you are verifying the employment information and rental history of the potential tenant. You may also want to call references or even see tax returns depending on your preferences.
Overall, you will find it is definitely less work to screen your applicants than it is to have to deal with tenant problems that may arise later on.
Now that you know more about how to do a credit check, be sure to contact us with more questions that you have as an investor or property owner. It never hurts to have more information.