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How to Check Tenant Credit Score?

How to Check Tenant Credit Score?

May 31, 2022
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How to Check Tenant Credit Score?
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When it comes to a prospective tenant’s credit report, you simply can’t work with assumptions. Running a credit or CIBIL score check is highly recommended as that can help you to learn a little more about the tenant’s financial conditions. If the tenant has a good credit score or rather report, he/she will pay their rent on time and you can rest assured that your property is in good hands. 

Why should landlords run a check on the tenant’s credit score?

As already mentioned, running a check on your tenant’s credit or CIBIL score is important as it gives you a clear idea of the tenant’s history of responsible borrowing, which means he can pay debts on time. Another thing the credit report tells you is whether the particular tenant is financially capable enough to rent your property. 

What to look for in a tenant’s credit report? 

A credit report can give you a bunch of information regarding your prospective tenant. It can tell if the person was a criminal, or in some cases was evicted, late in paying bills or rents, and ultimately if he/she is financially stable enough to build a credit history. 

Please note that the information provided in the credit report covers the past seven to ten years. 

What do you require to check a tenant’s credit or CIBIL score?

In order to run a credit check, you’ll require some information about the tenant, which includes:

  • The prospective tenant’s name
  • Date of Birth
  • Full residential address
  • Social Security Number
  • Present landlord
  • Present employer

Additionally, make sure to follow the guidelines set by the Fair Credit Reporting Act and further get a prospective tenant’s written permission before you run a credit check. 

Landlord’s obligations before running a credit score check

Most companies will insist on verifying that you are the actual landlord who has hired them to check the tenant’s credit score and report. However, this is what the verification process may require:

  • Verification of your current address
  • An identification proof
  • A document verifying that you own the property

Once you are done with everything, the company will initiate the approval process. The approval may take from 2 to 10 days, and once it is done, the credit check will get over in no time. 

Charging the tenant a credit check fee

Charging a prospective tenant a credit check fee is common in most states. Some landlords feel that charging a fee for a credit or CIBIL score check will save a lot of time and money, as tenants with a poor credit score will usually not agree on paying the fee. On the other hand, few landlords refrain from charging a fee as they are afraid that the fee will repel good tenants from renting the property. 

Keep in mind, that it is absolutely fine to charge a tenant fee as long as you are not using it for the credit check. In that case, make sure to return the check fee to the tenant. 

Can tenants voluntarily provide their credit reports?

Tenants who are applying for multiple rentals can come up with a credit report of their own, in order to avoid paying a fee every time a landlord asks for a credit check. However, federal law doesn’t require the landlord to accept the credit report provided by the tenant, which means you can still ask for a credit check fee to run a new check. But make sure to check your state laws, as they might differ. 

Go ahead and run the credit check

Collect the required information related to the tenant and reach out to the agency you have chosen to work with. Some agencies may ask you for the tenant’s consent form for the credit check. 

Final Verdict: Good Credit Report vs. Bad Credit Report

Finally, you have the credit report in your hand and it’s time to make decisions. First, let’s take a look at what can be done if the tenant has a good credit report. 

  • Tenant with a good credit report

Now that’s some good news. A tenant with a good report can be relied on as it seems that they have a high credit or CIBIL score and are capable enough of paying the bills on time. But make sure to not rely on the credit report entirely as they aren’t foolproof. Do not hand over your property without receiving the security deposit. 

  • Tenant with a bad credit report

If a prospective tenant’s credit report is bad you can choose to reject them or you can even ask them for clarification. However, if you do not rent them the property or charge them a higher rent due to their bad credit or CIBIL score, you must give the prospective tenant the name and address of the agency that helped you in acquiring the credit report. 

The Bottom Line

Running a check on your tenant’s credit is a great way to determine whether an applicant is truly capable of renting your property. However, do not involve in discrimination when screening all tenants as that may leave a bad impression on the latter’s mind. Also, make sure to choose a reputable credit agency to obtain foolproof credit reports.