An In-Depth Guide on Running Credit Checks as a Landlord
Article written by southern reality inc.
One of the tall tasks that you are faced with as a landlord of a building is to find tenants that are trustworthy and more importantly safe. One of the most inexpensive ways that you can go about this is by running background checks by yourself. Depending on the service that you choose, you can save a significant amount of money by choosing an online service. It’s also crucial that you choose a company that has been highly regarded by other landlords for both pricing and efficiency.
What Steps to take to Obtain a Credit Report
Each tenant that is applying to stay in the home must have a separate credit check run on them. They should oblige to provide personal information such as their: Social Security number, address(s), contact information, birth date, full name, etc. They must sign the consent form that allows you to run a credit check on them. If your applicant has something to hide, they might refuse to let you run a credit check – throwing up all sorts of red flags in the process. Also, collect a landlord credit check fee from the potential tenant to cover the cost of multiple tenants applying.
What You Need to Look For on the Credit Report
Once you’ve obtained each applicant’s credit report, it’s important that you avoid skimming through all of the details because you could potentially miss something of importance. Start with the Negative or Potentially Negative Items section on the report. This includes detailed information about their typical tardiness when it comes to paying their bills. Things like: past due, discharged, or in collections are all included and should be highly paid attention to.
How to Determine Whether or Not You Approve their Application
Much of this is, for the most part, obvious. Their past behavior is an indicator of how financially responsible they are and how financially responsible they will be when they start living on your property. However, there are instances where people were stuck in a tough situation and it’s only until they applied to your property that they received the financial break that they needed. Although they are rare, you shouldn’t cut all consideration when looking at each applicant’s credit report. You can also have a sit-down with your potential tenants to discuss their financial situation and come to a mutual agreement. People do change, and it’s important not to discriminate at first sight.
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