Credit Checks for a Potential Tenant

If you own a rental property and have had to deal with an undependable or dishonest tenant, you know the importance of choosing one who is trustworthy. You can avoid unnecessary financial losses from unpaid rentals and repairs from damages if you rent your property to a tenant you can depend on to not only take good care of the property you are renting, but one who will pay the rent on time. Doing a credit check is a good way to begin your tenant/landlord relationship. By reviewing carefully the tenant’s credit history before you allow the individual to rent your property, you can avoid unpleasant rental surprises. Or, at least you will experience fewer of them. Take the following 4 steps to complete a credit check on a potential tenant:

Step 1 – Prepare a Written Rental Application

• Either find a written application on the Internet or prepare one yourself. You can easily prepare a form on the computer by including form blanks for the following information:   
• Tenant’s name
• Birth date
• Phone number they can be contacted at
• Previous addresses
• Two credit references. (These requested references could prove beneficial if, in the future, you have an unhappy tenant for whom you need to have backup information to prove your position for refusing to rent your property to him)
• Names and phone numbers of previous landlords (By checking previous landlords, you can determine if the potential tenant met their previous rental obligations. By including this check you may not need to ask for a credit score, because you might learn that the tenant has not met their financial rental agreement with the previous landlord(s).

Step 2 – Contact a Local Credit Agency

Locate local credit agency either online or in your telephone directory. A local credit agency will usually have the ability and resources to get from the leading credit bureaus three credit scores for your potential tenant. You can choose to either require your renter to pay the cost for the credit report, or you can pay it, yourself.

Step 3 – Carefully Review Credit Score Information

After carefully reviewing the credit score information you have received from the credit agency, evaluate it to determine if the individuals appling to be your renters are paying their bills and paying them on time. While reviewing the credit reports, make sure to check and see if the addresses they provided for previous rental properties are accurate. Look for anything else that might be a red flag or potential problem in considering them as renters.

Step 4 – Ask for Letters of Recommendation

If your renter has no credit history, ask for either letters of recommendation from former landlords or from individuals who you might consider trustworthy and who could truthfully report to you on the dependability and honesty of your prospective tenant. This may be difficult if the prospective renter is new in the community. If he is, you can ask him for the names of your prospective renter's pastor, family member, employer, or work associates.