photo credit: amishsteve
The first step in performing a credit check on a prospective tenant is getting their permission. The easiest way to do this is to include it on the application or as an addendum to the application form. This way you can have a written statement that explains to them that you are going to check into their credit history and then collect the necessary information as well as a signature.
You can check with the credit bureaus on your own or, if you have a large number of tenants, you may want to hire a company that specializes in credit checks so you don’t have to do all the leg work.
When you check their credit history look for any claims made against them by previous landlords or if a creditor has had to take them to court in the past. This should immediately set off alarm bells and most likely send you looking for another tenant. A couple late payments to credit cards may give you a little pause, but unless there?s a history of this activity its probably not a big deal.
?
If you’re confused by credit scores, remember that the national average is 678, which is considered only fair. If you’re looking for a tenant with “Good” credit look for a score between 720 and 749, anything above 750 is considered “Excellent”. On the other end of the spectrum, anything between 620 and 659 is considered “Uncertain” and “Poor” credit risks fall below 619.
