Credit Reports – What You Need to Know About Them

When it comes time to do a tenant screening, you can’t be too careful. After all, you’re going to be counting on your tenant to pay you on time, so that you can pay your bills on time. If you wind up with the wrong tenant, it can create a mountain of legal fees, damage to your own credit score, and a giant headache!

Credit reports are the most common tool used in a tenant screening. However, they can’t account for everything. Here’s how credit reports are a big help – and how they also skip over some important stuff:

1. Credit reports show a pattern

If you’re doing a tenant screening, a credit report will show you whether or not your potential tenant has a history of paying his bills. If your tenant credit check turns up a bunch of delinquent bills and a bunch of run ins with collection agencies, you have no reason to believe that this person is going to pay you – on time or at all – if he’s your tenant!

2. Credit reports show a history – or a lack of one
If your tenant credit check comes back with a credit report that’s very bare bones, you might want to think twice about renting to this person.

After all, if this person hasn’t done much to establish a credit history – even any good credit – it could be a bad sign.

On the flip side, a lengthy credit report will show how your potential tenant got himself out of credit trouble and how long it took him to do it. For example, if your potential tenant ran into some trouble 10 years ago – and got everything cleared up in a year – that’s a good sign. Conversely, if it took him 9 years to get everything squared away, that says a lot, too.

3. Credit reports don’t tell you everything you need to know about a person

If you really want to do a thorough tenant screening, then you have to look at more than just a person’s credit report. After all, someone could have great credit – but could have other issues that make him a less-than-savory tenant!

That’s why the best tenant screening includes a full criminal record search. That way, you’ll know exactly who you’re dealing with. Bear in mind that it’s illegal in many places to refuse to rent to someone just because he has a criminal history. However, if a criminal record search turns up something that’s relevant to your situation – like the fact that your potential tenant is a sex offender and your apartment complex is near a school – you can deny his application.

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