Learning to Order Credit Report of Your Tenant

Learning To Order Credit Report Of Your Tenant - Tenant, Credit Report, Rental

Knowing how to order credit report can help you avoid tenants with financial problems. Were you aware of that? 

That’s since a credit report gives you an idea of the potential tenant’s financial status. That’s why I always order credit report on every potential tenant. 

This is called doing a credit check. Conducting a credit check prevents me from taking on tenants who can’t pay rent on time and in full. 

The result of the credit check is compiled in a document called the credit report. The information presented in this document contains details about the potential tenant’s financial activities.

This gives you an idea if they can regularly pay their rent on time and in full. 

But before you order a credit report, you should know that there’s a legal way of doing it. So do you know how to order credit report for potential tenants? 

I’ll help you with that today. In this blog post, I’ll teach you how to properly order credit report of your possible tenant.

How to Order Credit Report of Your Tenant

There’s a correct process for ordering a credit report. Failing to follow the laws in your area can make problems for your rental property business. 

You need to avoid this happening because it can drive away your potential tenants. In some cases, it can even get you into legal hot water. 

With that said, let’s see how to order credit report of your tenant properly.

Inform the Tenant About the Credit Check 

Every rental property business needs to inform the tenant about the tenant screening process. You need to thoroughly explain the process to the potential tenant to avoid misunderstandings. 

After that, it’s advisable to ask them to sign a consent form that allows you to use their information to order credit report. 

You need to do this because property managers can’t conduct background and credit checks without the person’s approval. 

Once you have their approval, the next thing you’re going to do is get the necessary information about them to order credit report.

Get the Necessary Information

Ask the applying tenant to fill a rental application form. The information you need to conduct a credit check will be required by the application form. 

Your rental application form should get the following information of the potential tenant to order credit report:

  • Legal name,
  • Home addresses for the last two years,
  • Social security number, and
  • Employer’s name.

Usually, the application form will give you the personally identifiable information of the tenant. This information can be used to distinguish or trace an individual’s identity. 

Why isn’t a name sufficient to order credit report? Because there are often cases where someone has the same name as another person. 

In that situation, the other identifiable information (like the social security number) can be used to distinguish between people. 

That prevents you from accidentally accessing the wrong credit report. 

You may reject the applicant if they refuse to give the information you need for conducting the tenant screening process, of course. That’s a landlord’s or property manager’s prerogative. 

It’s more likely the tenant is hiding something if they’re refusing to fill a rental application form and undergo the screening process. 

But if the tenant agrees to fill out the application form, use their information to order credit report.

Order the Credit Report 

Usually, property managers use the Internet to order credit report. There are hundreds of websites that offer credit checking services. 

However, property managers often use the services of the three major credit reporting bureaus when they want to order credit report. 

To get the most reliable credit report, go to the Experian, TransUnion or Equifax. Visit each website one at a time and order credit report from the one that suits your needs.    

Each website will require you to enter the personal information of the tenant. This is needed to ensure that you’re getting the credit report of the right person. 

You can ask the tenant to pay for the fee when you order credit report for them. Most rental laws allow the property manager to charge the tenant for the cost of conducting a background and credit check. 

Basically, credit reports will give you the potential tenant’s financial activities for the past few years. Their contents are usually divided into different sections. 

To give you an idea, here are the contents of a credit report.

Contents of a Credit Report

The contents of a credit report may vary depending on which bureau the report came from. However, all credit reports will show the same data. 

Every credit report is divided into different sections. Each section contains different types of information. 

To give you an idea of it, here are the contents of a credit report:

  • Identifying information. This is basic information including the tenant’s name, address, and social security number.
  • Credit history. You’ll be able to see 7 to 10 years worth of bank account, credit card account, and loan information for the applicant. This includes how long the account has been open, the account’s payment history, the loan limits, and any co-signors.
  • Public records. Evictions, bankruptcies, tax liens, and any civil judgments will be found in this section.
  • Inquiries. This includes the names of the persons who have requested a credit report for your potential tenant in the past 12 months.

 

The information presented in the credit report can help you in choosing the right tenants for your property. 

Do you know how is this possible? Let’s take a look at how you can use the information on the credit check to pick the right tenants. 

Use the Information on the Credit Check

A credit report can give you a good idea of whether or not your tenant will pay their rent on time or not. 

Your decision on the potential tenant’s application can be based on the credit report and other information you acquire through the tenant screening process. 

An ideal credit report should have no late payments or a large number of debts. This is a clear sign that the potential tenant is financially responsible. 

But if the credit report shows the opposite, then it’s better to decline the tenant. 

A credit report with a lot of bad information is an indication that the potential tenant will give you problems regarding rent payments in the future. 

Whether you’ll accept their application or not, you’re required to tell them your decision. 

If you decline them because of something you found in the credit report, you should send a letter describing the reasons. 

Also, rental laws require you to give a copy of the credit report to your potential tenant. This is needed so that they can check it for any inaccuracies after you order credit report.

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Final Thoughts on Learning How to Order Credit Report

In this blog post, we talked about how to order credit report. Every rental business should order credit report to avoid accepting a financially unstable tenant. 

However, before you order credit report, you should ask your applicants to fill a rental application form first. 

The rental application form will provide you with the necessary information to help you order the right credit report of your potential tenant.  

It should also inform the tenant of what you plan to do with that information, i.e. that you need it to order credit report. 

The credit report contains the financial activities of the tenant for the past 7 to 10 years. The information in the report will help you determine if the potential tenant is a good renter or not. 

That’s why it’s important for landlords and property managers to know how to order credit report. If you have more questions regarding how to order credit report, leave them in the comments below.

 

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Article: Learning to Order Credit Report of Your Tenant

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