A landlord credit check is one of many tools used by landlords in order to gauge the amount of as well as the type of risk a potential tenant is.
The idea is that that past credit related issues is a good indicator to determine the likelihood of a tenant defaulting or paying the rent on time and in full. To some extent this is true and running a credit check is one of the best ways to find a good tenant but you need to understand what a landlord credit check entails and use it properly.
Should you use the landlord credit check as you sole for selecting a tenant?
A popular myth perpetuated by so called “experts” is that a landlord can run a credit check and use it as the sole basis for his or her decision. Therefore, an applicant tenant who has a very bad credit report is sure to get a denial. This is absolutely false.
The truth of the matter is that a landlord can run a credit check and will use the credit report as a basis for his or her decision. However it is still the discretion of the landlord to deny or approve the application.
A tenant who has a low credit score or a bad credit report can increase the chances of approval by admitting this outright and if he or she has sufficient capital, just tell the landlord that he or she is willing to pay an increased rent to offset the risk or is willing to pay additional deposit as well as advanced deposits. Assuring the landlord that you are more than willing to give postdated checks outright at the contract signing is also a good idea.
There are many reasons for a low credit score and if the prospective tenant it honest and has some valid reasons you should take the time and listen. Many times a tenant that has bad credit for reasons beyond their control make great tenants since they want to get back on their feet and realize that paying on time is one of the best ways to increase their credit scores.
Will Running A Credit Check Hurt Your Credit Score?
Another popular myth is that a tenant applicant should not give authorization for the landlord to run a credit check because the more credit inquiries are made over a short span of time the lower the credit score will get. Taking into consideration the fact that a tenant will shop around with several landlords means that the tenant applicant is left with dozens of landlord credit checks which will definitely lower the credit rating. This is absolutely false.
The truth of the matter is that landlord credit checks seldom affect a person’s credit score. The reality is that a credit report with a lot of credit inquiries put a third party on the alert and can even cause a slight drop in the credit score.
However this is only true in case of hard inquiries. A credit inquiry by a landlord is considered a soft inquiry regardless of the number of inquiries provided it was made over the span of a few weeks. All inquiries will be considered as a single soft inquiry and by law cannot affect the credit score
The reason is because the law recognizes the right of a tenant applicant to shop around for the best deal possible and this means going to dozens or even hundreds of tenants to request a quote.
What if a tenant still doesn’t want you to run a credit report?
If a tenant is still leery about having a credit report run on them they can make things easier by bringing his or her free annual credit reports when talking with a landlord. Just make sure that the same is not older than six months. And it would be wise to bring the top three credit reports from Experian, TransUnion and Equifax, which hold greater weight with landlords.
A landlord credit check is one of the best ways to screen a tenant and both the landlord and tenant should be aware of the need for a good credit score. But the truth of the matter is that is it just one of the tools a landlord can use to find a good tenant.
For more ideas and tools to find a good tenant go to www.creditcheckforlandlords.org.
In these tough housing times many homeowners are turning to renting out thier houses and condos when they can’t seem to sell them. As more homeowners are turning into landlords they are faced with new problems like trying to rent out thier property and finding tenants. Performing a Tenant credit check is very important if you plan on renting out your property to obtain passive income. By being aware of the credit history of an applicant, you would be able to predict whether or not he is responsible when it comes to making payments. Of course, you should only rent out to those who can pay their rent on time. If you do not want to have monetary problems, you need to be able to find that has a clean credit history and background.
In addition, you should be careful as to whom you rent out to. See to it that these people do not use your property for illegal activities such as drug dealing and human trafficking. You should be able to look at their records, so you will know if they are good citizens who abide by the law. Aside from doing a tenant credit check, you should also be able to get personal references who can testify that these people are responsible tenants.
As you know, there are some tenants who mess up and damage the places they rent. If you do not want to incur additional costs for repairs, see to it that you choose your tenants wisely. As much as you may like to go with a gut feeling on a tenant you must be objective when it comes to deciding who should occupy your property. If you want to avoid lawsuits against discrimination, you should be ready with proofs such as copies of the applicants’ credit history. You can actually approve and deny applicants based on such information.
You should be able to meet your applicants. Just a tenant credit check is not enough. You should be able to see your potential tenants personally so you can chat with them and get to know them better. Ask about their family situation, their lives, and what they do for a living. This will give you an idea on what kind of people they are. Typically, those who have high-paying jobs have a better chance of paying rent on time and not damaging your property. A good credit score indicates that they take care of their financial responsibilities and there is a good chance they will take care of your property.
Then again, do not rely on this basis solely. You should check their credit records and find out if they have lots of debts. If they do, find out if they still have enough money to pay for the rent. You should avoid renting out to people whose salaries all go into their debts. Beware of those who live lavish lifestyles but struggle to make ends meet. In addition, you should let them know about your rules and regulations.
For instance, you may want to put up a ‘no pet’ policy. Just think of it, if there are pets in your property and they got hurt, you will be held accountable. Even though you did not hurt the pet or are not actually involved in any pet accident, you will still be held accountable because it is your property. Whatever happens in the premise of your property, you are still partly liable. So, if you want to avoid unnecessary troubles, you should avoid renting out to people with pets. If you do rent to tenants with pets it is perfectly acceptable to have them provide you with a seperate security deposit in case of damage specifically due to pets as well as higher rental rate to compensate for any excessive wear and tear caused by the pet. Some landlords also include a clause that the tenant would be responsible for the cost of steam cleaning the carpet at the end of the lease.
If you require renter’s insurance this would be good time to let the tenant know. Some landlords don’t require this but it is one of the cheapest policies available and one of the best values. As a landlord there are several ways you can help the tenant get a discount on their policy by installing smoke and fire detectors, deadbolts and security systems. You can even offer them a discount on rent if they have a policy in effect. Plus a tenant that is responsible enough to protect their belongings will be more responsible to protect your property.
Finding a good tenant is the most important aspect of being a good landlord. For more information on how to be a great landlord go to www.creditcheckforlandlords. In addition to seeing more articles on how to find a good tenant you will see examples of the second most important aspect of being a great landlord – keeping good tenants.
