Using Credit Reports to Screen Tenants

A credit report is an important element in the background screening of a potential tenant, but it isn’t the only element. We would never recommend doing a background check on a tenant only to consider credit history.

Complete a thorough and dependable background check

In addition to credit, you want to make sure you include a national criminal background check, a national sex offender check and an eviction search. You will also want to verify income to make sure your potential tenant makes enough money to pay the rent, and check references by talking to the tenant’s two prior landlords. That, in addition to a credit check, will constitute a thorough and dependable background check.

Credit reports can tell you several things about an applicant:

  1. Attitude towards credit. Your applicant’s credit score will tell you whether they take paying bills seriously.
  2. Collection activity. Don’t just look at the credit score. Read the entire credit report to determine whether there are collections from apartment buildings or prior landlords. If so, they may have walked out on a previous landlord without settling rent and other bills, and you don’t want to find yourself in the same situation.
  3. Unpaid utility bills. In the 25 years that Hoffman Realty has been in the property management business, we have found that if someone does not pay gas, electric or water bills, there is a good chance they will not pay their rent either. You do not want tenants who ignore or don’t pay their utility bills.
  4. Bankruptcy. A credit report will tell you whether the person is currently in bankruptcy proceedings. If this is the case, they could potentially take your rental and include it in their bankruptcy filing. This could potentially leave you without rental payments while the bankruptcy proceeds. You do not want to rent to tenants who are in the process of a bankruptcy.
  5. Identify verification. A credit report can help you establish whether the applicants are who they say they are. In this age of identity theft and fakeries, a credit report can be helpful. Use the information you find in the report to verify social security numbers, driver’s license numbers, dates of birth, former addresses and other identifying information.

Credit reports are useful when you are screening tenants and considering the whole application package. Contact us or give us a call if we can answer any questions at (813) 875-7474.