It is very important to run a credit check for rentersas a landlord. This is very useful, especially in helping curb the risks that the tenants may pose of not paying rent. This strategy is very sound and you can be sure that you will not be on the losing end by doing so.
Checking credit also ensures that you treat your tenants equally which in turn means you do not discriminate on any potential tenant.
Things to look for when credit checking for renters
- One of the things that is mostly looked for when you want to check rental history for potential tenants is their history of paying their bills on time. Landlords cherish any tenant who has a track record of paying bills on time. It is frustrating and costly to collect rent from a tardy tenant.
- Late rent is a huge factor contributing to eviction. Eviction is a costly process which consumes a lot of time. Therefore, it is also important to check whether your potential tenant has been evicted before due to late rent payment.
- Bill payments are a definite red flag. Ensure that you double check that your potential tenant has no problem paying his bills. This is usually a warning sign and you do not want such a tenant in your house.
Ensure that the decision you make is the best as you do not want to disqualify a tenant. Rather, you want to be aware of any pitfalls, should you decide to rent out to the tenant in question.
Benefits of Running Credit Checks on Tenants
- You are able to approve more tenants
- Improve on bad debt recovery
- You are offered a credit history building amenity
- Realization of a more steady cash flow
- Identify highest quality residents
As a landlord, you require permission to be able to order a credit report on a prospective client. This happens especially when the tenant fills out the rental application form.
This credit check is paid for and landlords usually pass the fee on to the potential tenants in form of an application fee.
The following are some of the results that credit check reports provide:
- Credit rating
- Verification of your employment
- Background check on any sex offenses
- Criminal background
- Eviction history and unlawful detainer
- Terrorist search
- Standard credit report
These searches reassure you that you are giving your property, especially if valuable, to someone who will responsibly look after it.
Can you rent without Credit?
This is very difficult, especially as an immigrant or a student. However, once you have found a place to rent, ensure that you establish credit by paying your rent through a company that reports rental payments. This way, you are secured for future potential properties you might want to rent.
In most cases, landlords rent out their properties to people without credit if they can provide a co-signer who has credit and can pay a security deposit on the property.
John Collins is a professional real estate agent who has worked with multiple landlords and tenants. Visit his blog and learn more about how to check rental history.