“How to Check Your Credit Score”
You’re relocating to a new area and need to find a place to live.
If you can’t afford to buy… you’re probably then looking to rent. Or maybe if it is a completely new area you may want to rent until you get a feel for the area.
In planning to rent a property you must go through a process of tenant screening that will involve a check of your credit score.
Did you know that one of the most important qualifiers for a property management firm or landlord to rent a property is your Credit Score?
To help prepare you, let me give you an idea on how you will be able to know how to check your credit and know if you are qualified in renting a property.
Check Your Credit Score
So it’s time to check your credit score… but what really is a credit score? Let’s talk about that first.
What Is A Credit Score
According to Experian, a credit reporting and scoring agency, a credit score is a numeric representation of your credit history from 300 to 850. However, industry-specific credit scores may range from 200 to 900.
The credit score is comprised of different components such as the payment history, amounts owed on loans and credit cards, length of credit history, number and types of credit in use, and the number and type of account Inquiries.
Lenders and property managers generally use this report to evaluate your credit risk, ability to pay rent on time, and other criteria. When a possible tenant has a higher credit score or FICO score this normally means that the credit agency has assigned lower risk to them or that they are traditionally on time when paying their bills and debts off.
Submitting The Application
When tenants submit an application to rent, you should always get the authorization to process the application and do the screening process which normally includes a credit check. When doing credit checks and credit score, the property manager must comply with State and local rental laws and have the correct and legal authorizations to run such checks.
When a credit report is run, the possible tenant is allowing the property management firm to look into and evaluate the list of your past and present credit accounts. The credit check agency will most likely assign a credit score called a FICO score or some sort of score evaluating your credit history and ability to pay your debts.
What does a Credit Score Show?
When doing a background check and credit check, most of the property managers and landlords are looking for a positive or high credit score and a history showing you have the habits of paying your bills on time and avoiding collections and bad debt write-offs. Each time a credit report is ordered the agency doing the credit check will assign a credit score that defines their evaluation of your creditworthiness and ability to pay your bills.
Credit checks and credit scores are negatively affected by multiple requests, bad credit reports, unpaid debts, collection accounts and any other reports of bad payment history. Additionally, a credit report will identify collection agencies and instances where your account due to lack of payment was passed from the lender to a collection agency. Each time a credit check is run, the credit reporting agency documents the type of request and the outcome of the request.
Property managers and landlords are specifically looking into the financial history of possible tenants when running the credit score and credit checks. Running Credit Checks and Credit score is part of the tenant screening process to determine if the possible renter has the financial history to be able to pay their rent on time. A low-risk High FICO score would normally qualify a renter over someone who has a low credit score and has problems paying their debts on time.
How Can You Access Your Report?
There are 3 credit agencies that produce credit scores and do a detailed credit check on prospective renters. The 3 major credit reporting agencies are Equifax, Experian, and the TransUnion. Anyone can request a copy of their personal credit report and credit score from these agencies. There is normally a fee charged for this service, check with each agency to determine total costs of this service.
Possible tenants should be proactive and order their own credit reports and know their credit score prior to doing any type of loan or application for rental. Knowing what is on their personal credit report and understanding their credit score will allow possible tenants to be more prepared to answer questions regarding your credit history, credit score and other items reported.
Find Inaccuracies In Your Report?
When you understand what is reported on a credit report and by the credit score you can legally make requests to change or modify the information contained in that report. To do this tenants should run their credit report from each of the three agencies, review them carefully, and determine if any of them contains inconsistent information or inaccuracies. If inconsistencies and inaccuracies are found then you can legally dispute these reports and have them amended including the correct information. Often this process is time-consuming and legally difficult so finding an agency who specializes in credit repair could be the best way to get your credit reports up to date and with correct information.
The US Government has a process where anyone can request an annual free credit report with credit scores from the 3 major credit agencies Experian, Equifax, and TransUnion. Go to this website to request your own free credit report and credit score. https://www.annualcreditreport.com/index.action
What Are The Requirements?
Each credit reporting agency has specific requirements for doing credit checks and producing credit scores. The tenant application and signed authorization to do a credit check on a potential renter are required. The credit agency normally requires name, date of birth, social security and other personal identifying information.
If a tenant is doing their own credit check, they must go directly to Experian, Equifax, and TransUnion and fill out required forms of identification to get these credit reports and credit score.
For additional information on the 3 major reporting agencies, I have provided the following links to their official websites so you can do further research.
- Experian http://www.experian.com/
- Equifax https://www.equifax.com/
- TransUnion http://www.transunion.com/
Credit Monitoring Services
Often times to keep on top of your credit reports and credit score you can employ a credit monitoring service to keep you up to date with any current activity or requests for your credit report. Experian, Equifax, and TransUnion offer credit monitoring services for a fee.
If you use these agencies then you can put a block on any credit inquiries to limit possible identity theft and unlawful acquisition of your credit report by unauthorized parties. When a tenant or possible renter uses credit monitoring service, they can monitor all the activity on their credit reports and update and request changes when necessary. Credit monitoring services do charge a monthly or yearly fee to monitor your credit score.
If you are a person who wants to carefully monitor your credit reports, help avoids identity theft, paying the 3 major credit reporting agencies or a credit monitoring agency to monitor your credit will definitely work for you.
What Do Credit Monitoring Services Do For You?
You will be able to get alerts and daily monitoring of your credit scores just in case something unexpected happens and you want to dispute immediately. This also protects you against stolen or lost property. Let’s say you lost your credit card you can instantly cancel it. Or even against identity theft if someone wants to steal your identity and wants to abuse your credit card.
Security Questions To Receive The Credit Report
The Credit reporting agencies are very aware and are proactive at attempting to stop identity theft and unlawful access to a person’s credit report. As a property manager or when a possible tenant goes online to request their credit report, the agencies providing the report will ask numerous questions to make sure there is no identity theft or unlawful access to credit reports.
When requesting a credit report and credit score, you should be prepared to answer various questions related to the person’s finances, past living locations, and other personal details.
Since a credit report contains private information about your credit history, spending, and loan history, your identity will definitely be taken seriously. Expect questions about the following:
- Any mortgages or loans taken out
- Credit card information
- Personal information
- Past addresses lived at
- Trick questions regarding loans and other things that are not related to you.
Since identity theft is a major concern the credit agencies will do a thorough questionnaire to make sure you are the one requesting your credit report or if you have the correct authorizations to view and receive a tenant’s credit report and credit score.
How Can You Get a Free Credit Report?
The Fair Credit Reporting Act entitles everyone the ability to request and have an annual credit report from Experian, Equifax, and TransUnion done for free.
The Government has a secure online process where anyone can request an annual free credit report with credit scores from Experian, Equifax, and TransUnion. Go to this website to request your own free credit report and credit score. https://www.annualcreditreport.com/index.action
Final Thoughts On How To Check Your Credit
We discussed how to check your credit, and what to look for in the report from the perspective of both the renter and the property manager. As a renter, you should be continually monitoring your credit score to make sure that it is as clean as possible… and protect yourself from identity theft. As a property manager, checking the credit of potential renters protects you and the rental property because it can help serve as an indicator of how well the renter will pay their bills (and especially the rent!). Follow the tips above to develop your own best practice for screening tenants.
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