Posted by A tenant credit check can help a landlord tell the difference between a potential tenant who will be great and always paying rent late. Some homeowners choose to run a credit check themselves, while others use an online screening service or a property management company. In this article, we’ll look at how credit checks work and how much they cost, what to look for on tenant credit score checks, and the information needed from a potential tenant to run a tenant credit check for a rental property.
What Is A Tenant Credit Check?
Tenant credit checks are part of the regular screening process when potential tenants apply to rent a property. Running a credit check on an applicant helps the landlord determine if the applicant can rent the property.
A tenant credit check will indicate whether the tenant has a history of paying bills on time, how much income and debt the tenant has, and whether the potential tenant has financial problems, such as liens or deciding against them, or staying behind on child support.
If a potential tenant needs to catch up on other payments such as credit cards or car payments, the tenant may eventually fall behind on the monthly rent as well. Tenant credit checks can also include an applicant’s credit score, as determined by one of the three main credit bureaus: Equifax, Experian, and TransUnion.
Benefits Of A Tenant Credit Check Include:
- Helping to avoid signing a lease with a tenant who will not pay rent on time.
- It gives the landlord a better idea of how responsible and reliable the tenant is based on past payment behavior.
- Making it easier to calculate a tenant’s debt-to-income ratio will help the landlord understand whether a potential tenant can afford the rent.
- Allowing the landlord to compare the tenant’s rental application information with the tenant’s credit check data.
Information Needed To Run A Tenant Credit Check
A landlord or property manager is required to follow Fair Credit Reporting Act guidelines and obtain permission from the tenant before performing a credit check. Once a tenant’s credit check has been received, the landlord usually requires additional permission from the tenant before contacting the employer or creditor.
Here are the general information needed to run a tenant credit check:
1. Obtain Each Tenant’s Rental Application.
Every potential renter who is older than eighteen must complete a rental application and provide the following details:
- Applicant information includes full name, Social Security number, driver’s license number, date of birth, home and workplace phone numbers, and email address.
- Current address including date of arrival and departure, landlord name and phone number, current monthly rent, and reason to leave.
- Other residents who will live in the property, with a list of names and dates of birth of each resident over and under age 18.
- Emergency contact information and relationship to the tenant.
- Personal reference and relationship to the tenant.
2. Get The Tenant’s Permission To Run A Credit Check
Each applicant must sign the completed rental application that will be used to run a credit check on the tenant. The rental application must include a statement informing the tenant that a credit check will be run, and the tenant accepts by signing and allowing the landlord to run a tenant credit check.
3. Collect A Tenant Credit Check Fee From Each Adult Applicant
Legal Resources website Nolo.com according to, most cities and states allow the landlord to charge the tenant an application and credit check fee to pay the costs of running a tenant credit check. Prospective tenants must know the amount and purpose of the fee, and understand that paying the fee does not guarantee that the tenant will get approval to rent the property.
Fees paid to the three major credit bureaus – Equifax, Experian, and TransUnion – or an online tenant screening service typically run between $25 and $75 depending on the information requested. In some cases, the tenant screening company will charge a credit check fee directly to the applicant.
4. Confirm Landlord Or Property Manager Identity
Most tenant screening services will ask for proof of identity by requesting the following information before running a tenant credit check:
- Landlord’s identity document such as driver’s license copy.
- Proof of the landlord’s residence such as a bank, mortgage, or utility statement.
- Verifying that the landlord owns a rental property such as a mortgage statement for a rental property loan or a property tax bill.
- Verification that a property manager is authorized to run a tenant credit check on behalf of a landlord, such as providing the first and last page of a signed property management agreement.
An advantage of using an online screening service to run tenant credit reports is that the applicant screening allows the company to provide tenant credit check reports to the landlord.
Often this process only takes a few minutes, and the landlord receives an email with a link to view and download the tenant’s credit check.
What To Look For On A Tenant Credit Check Report
A tenant credit check report can provide a landlord with abundant information about a potential tenant. The information provided on credit checks generally covers the last 7 to 10 years and includes the following information:
Credit Score
Depending on the tenant screening service used, not all tenant credit check reports provide tenant credit scores. If a report includes a credit score, the most commonly used is the FICO score.
FICO scores range from 300 to 850. In general, the higher the tenant’s credit score, the lower the potential risk. Generally, a credit score above 650 may indicate a moderate or acceptable level of risk.
Adverse Information
This includes negative items such as accounts that are past due, are in the collection, or have been charged by a creditor as unincorporated. Common types of delinquent accounts found by the landlord may include late credit card or car payments, outstanding student loans, or unpaid child support.
Pending Legal Actions
A prospective tenant who is involved in legal action, such as a lawsuit from a debtor trying to recover on a judgment or a pending bankruptcy filing may soon find it difficult to pay rent for the house the tenant is applying for.
Personal Credit And Loan Accounts
A tenant credit check will provide a landlord with information on each credit and loan account of a potential tenant, including the current balance and credit limit, the number of late payments, and how late the payments were – e.g. 30, 60, 90 days. Or criminal and sent for collection.
Closing Thoughts
Although running a tenant credit check may seem like too much extra work, the potential consequences of not checking a tenant’s credit can be serious. A landlord may have a tenant who threatens the neighborhood, or who has to be evicted due to non-payment of rent. Tenant credit checks help a landlord select the most qualified tenants who will look after the property and pay the rent on time.
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