03 Sep Tenant Credit Check
Tenant Credit Check
Although a tenant credit check is only one of several factors in the tenant screening process, it is an important one. That’s because, it can help you assess whether or not a prospective renter is a risk, or if they meet or exceed specific requirements to rent from you. A prospective tenant’s credit score can range from 300 to 850. While a high credit score can indicate a prospective renter is financially responsible, a lower one can say many things. Or put simply, there are some situations that can negatively impact the credit score of a financially responsible person.
For this reason, it’s important to pull a report that includes evictions, bankruptcies, and judgments, along with other background information. Screening a tenant properly often makes the difference between success or failure. But, since you can’t always judge a book by its cover, it’s important to dig deeper into the financial condition and habits of your prospective renters. With this in mind, we offer some insight on what to include in a tenant credit check and how to analyze the information.
What To Include In A Tenant Credit Check
A bad tenant can lead to increased turnover, expensive maintenance and repairs, as well as evictions. Which is why, screening your tenants is one of the most critical steps in the leasing process. For this reason, you should always include the following items in tenant credit check reports:
Credit + Background Check:
- Credit Score
- Credit Inquiries
- Fraud Indicators
- Financial Summary
- Criminal Records
- Public Records
IMPORTANT: always run a new credit and background check here‘s why
How To Analyze A Tenant Credit Report
Consistency and stability, things most landlords look for when analyzing a credit report. While this is true, before you run and analyze a credit and background check, you must first determine your risk tolerance. For example, on paper, a tenant may not appear to be financially responsible. But if you dig deeper, you might find a period of unemployment. As a result, they might have derogatory items on their credit report but may still be a good candidate for your rental property.
Remember, good people fall on hard times and the derogatory items may not be a representation of their attitude toward financial responsibility. For this reason, it is worth your time to analyze your reports. In general, the credit report and background check will help you determine:
- If the tenant is likely to pay the rent on time each month
- If the rent price is something they can afford
- Relevant insight into your prospective tenant’s behavior and character
As a landlord, you need to screen every potential tenant. After all, it is in your best interest to choose a tenant who can pay the rent on time, and keep your rental property in good condition. A tenant credit check and background check provides relevant insight into your prospective tenant’s behavior and character. With a more in-depth view, you can assess whether or not a prospective renter is a risk, or if they meet or exceed specific requirements. By taking the time to pull the right information together, you can make better decisions about the people you rent to.
If you have questions about tenant credit checks or need help finding good tenants, please contact us. We manage single-family homes, condos, and multi-family properties throughout the San Diego area. Whether you are interested in changing property managers, or simply looking to hire a property management company for the first time, we can help. Call us today at (858) 576-2176 to get started.