In Fall 2022, around fifteen percent of renters were behind on their rent. As a landlord, this statistic might raise concerns about the financial reliability of potential tenants. But don't worry; a thorough tenant screening process can minimize the risk of rental payment issues.
A credit check is an essential part of this screening process. But how to run a credit check on a tenant? Keep reading to discover the essential steps involved in getting a credit report.
Why Check Credit
The credit report includes details such as credit scores, payment history, outstanding debts, and public records like bankruptcies or liens. When a landlord reviews this information, they're assessing the tenant's ability to meet financial obligations. In other words, they're seeing how likely it is that the renter will pay rent on time.
How to Run a Credit Check on a Tenant
The good news is that anyone can run a credit check as part of their tenant screening. There are two popular methods to choose from.
Direct Credit Check
One option is to get their credit report from a credit bureau. These bureaus typically charge a fee for accessing the credit report.
Credit bureaus like Experian, TransUnion, and Equifax are popular choices for conducting credit checks. Landlords can access their websites and follow the stages to obtain credit reports for potential tenants.
Credit Reporting Agency
Another popular method is employing a credit reporting agency. These agencies provide detailed credit reports to landlords and employers.
Choose a reputable credit reporting agency, provide them with the tenant's information, and pay a fee to get access to the credit report. The agency will handle the verification process and deliver the report to you, saving you time and effort.
Preparing to Run the Credit Check
For a credit check, you must first get the tenant's permission. You can do this by providing them with a consent form specifically for the credit check. The form should clearly outline the purpose of the credit check and inform the tenant that their credit history will be accessed.
Next, gather all the necessary information from the potential tenant:
Name of spouse
Social security number
Date of birth
Given that this is sensitive information, running a credit check can sometimes raise concerns for the tenant. Be prepared to explain:
The purpose of the credit check
How it factors into the background check
How their personal information will be handled
Addressing questions upfront can help alleviate any apprehensions the tenant may have. This sense of trust and transparency fosters a successful landlord-tenant relationship.
Make Tenant Screening Part of Your Rental Process
A credit report allows you to assess a potential tenant's financial responsibility, minimizing the risk of late payments or defaults. Reports are available for free on the three major credit bureaus' websites. However, you don't want to just pull an applicant's credit report without knowing the proper ways to judge it.
Now that you know how to run a credit check on a tenant, contact PMI Atlanta OTP to make this part of your rental process. We'll handle credit checks and the entire tenant screening process for you, ensuring you always have quality renters on your property.