Residents
Owners
When you decide to start renting a home to a tenant, you may be wondering if it's work doing a credit check. There are a few things to look at and if you want to minimize your risk, a credit check is a good thing to do. Here are a few things to know about doing a credit check.
Avoid Discrimination
If you decide to do credit or background checks, you need to make sure you do them on all potential tenants. This will help you to avoid discriminating against anybody or being accused of choosing a renter unfairly.
Which Credit Report Should You check?
Whether you do a full three report check or you just check one, you should know what all three reports will show. You can get a FICO score from any of the reports, however.
Checking all three reports will give you the most thorough look at what your potential tenant has on their credit. However, this is a bit more expensive, but you can ask for an application fee to cover the cost of the check.
What Should You be Looking for?
After pulling the credit reports, it's best to look at the history of paying bills for each tenant. If the person pays their bills on time, chances are, they will pay their rent on time, too.
A few red flags include:
- Late payments on bills
- Delinquent Debts
- Collections
- Repossessed Property
Don't just look at the score, as it may not show you the ability of the potential tenant to pay the rent every month.
Make sure you choose somebody with the ability to pay the rent. However, don't use a credit check to necessarily disqualify applications. Instead, use it to see what potential issues you might run into with the renter.
