“A Quick Guide On How To Get A Credit Report”
Do you know how to get a credit report on your potential tenants?
The credit report is a document produced after conducting a credit check on a potential tenant. The credit check is one of the most critical aspects of the tenant screening process.
Property managers use the result of the credit check as a basis for choosing the people they rent to. Generally, you want tenants with good credit reports.
However, there’s a proper procedure on how to get a credit report. You can’t do it to just anyone because the law may not allow it.
In today’s blog post, I’ll be sharing with you how to get a credit report to help you avoid violating rental law while finding the renters you want.
Steps on How to Get a Credit Report
You can ask a rental lawyer to help you do a credit check. However, doing this will take up time and money.
Keep in mind that property managers need to act immediately. They should conduct the screening process once a person submits a rental application.
By following these steps on how to get a credit report, you can save your time and money on doing a credit check.
However, before we go into that part, let’s first know the importance of conducting a credit check.
Importance of Conducting a Credit Check
Why learn how to get a credit report? Because it’s one of the best ways to tell if someone who wants be a renter is a good bet for your business. You’ll be able to figure out which applicants are capable of paying the rent regularly.
However, a credit check doesn’t tell you that the customer in question will always pay you on time in the future. All it does is give you some assurance that they’re likely to, based on how they’ve handled their finances in the past.
The credit check produces a document called a credit report. It contains detailed information on the tenant’s financial activities.
Information Included in a Credit Report
A credit report is a summary of credit history. That makes it very important for a lot of financial decision-makers.
That’s why it’s important to check your credit reports regularly. It doesn’t matter if you’re someone leasing out a property or renting one. You want to ensure the information in them is correct.
However, what’s inside these reports may vary sometimes. It depends on the company or the agency that made the report.
Here’s the data that you can usually see in a credit report.
- Identifying Information: This is basic information on the person. This includes the name, current and past addresses, date of birth, name of spouse, Social Security Number, etc.
- Credit History: The person’s bank accounts, credit card accounts and any loans are part of credit history. This part will tell you how long each of their accounts has been active.
- Public Records: This part lists things like known evictions, bankruptcies, etc.
- Inquiries: This will show the names of other people who have requested the person’s credit report before.
The information on the credit report can help you choose tenants whose finances are in good shape. That means they’ll be likely to pay the rent without any delays or problems.
But before you order a credit report, make sure you meet the requirements for getting it.
Requirements Before Getting a Credit Report
The first step on how to get a credit report is to ask the possible tenant to fill a rental application. You also need some of their basic information.
You also have to get written permission before you order a credit report of any person. Most states don’t allow property managers to do background and credit checks without it. You could actually be going against the law if you forget this step.
That’s why knowing the laws in your area helps when figuring out how to get a credit report. You can’t learn how to get a credit report without learning when you’re allowed to get one.
So, as part of learning how to get a credit report, do some legal research. That way, you can avoid unpleasant surprises and save yourself time, money, and frustration.
Aside from the written consent of the tenant, most rental laws also require property managers to submit these:
- A document proving their current address (telephone bill or similar).
- Proof of I.D. (driver’s license or passport).
- Proof that they own or are assigned to manage the rental property (deed, insurance document, mortgage statement, proof of title, utility bills, purchase agreement).
Remember this tip too when learning how to get a credit report: make sure that you’re getting it from a reliable credit reporting bureau. You can’t trust anything in it otherwise.
Proceed to Getting the Credit Report
If you want to learn how to get a credit report, you’ll need to learn about the different credit agencies.
Choose the agency that’ll provide a reliable and accurate credit report of the possible tenant. There are 3 bureaus that are considered the default options in the United States. If you want to learn how to get a credit report, you’ll have to learn how to request credit reports from them:
However, you can still use other credit reporting bureaus if you want other sources. There are hundreds of agencies that offer credit reporting services on the Internet.
Many of them can provide the result of the credit check quickly but others take several days to verify the information.
Analyzing the Credit Report
Learning how to get a credit report won’t matter if you don’t know how to read it. Once you actually get the report, take a look at what it says.
Check if the credit report contains all the important information of the person. Look for items that can convince you that the person is a responsible renter.
One of the things you can look at is the credit score. This is even the first thing most property managers look at in a credit report.
Usually, property managers only choose tenants with a credit score of at least 650. The credit score is based on how the person handles their financial responsibilities.
Potential tenants with a high credit rating are more likely to pay rent in full and on time.
Aside from the credit score, you should also look for negative items on a tenant’s credit report such as:
- Late payments,
- Unpaid accounts,
- Judgments, and
- Amount of debt.
A credit report with negative items is a clear sign that the person is having financial troubles. If the credit report also contains any of the negative items listed above, it’s better to discuss it with them.
Review the credit report with the person and try to be fair. For example, allow them to defend or explain the negative items. Doing this will help you in making your final decision whether to rent to that tenant or not.
If you’re about to reject a tenant because of their credit, make sure to check the rental laws in your area. You want to be sure that’s allowed.
Final Thoughts on How to Get a Credit Report
In this blog post, I talked about how to get a credit report. Property managers need to check the credit of potential tenants to avoid having financially unstable renters.
The credit report contains useful information about a person’s financial activities. It includes the payments they made for the last two years, the number of accounts, bankruptcy, and the total amount of debt.
Property managers need to get written approval from the tenant before proceeding to a background and credit check.
Make sure to meet all requirements needed before you order a credit report to avoid unpleasant surprises and save yourself time, money and frustration.
Property managers accept tenants based on their credit score. Just check the rental laws in your area to know how you can properly reject the applying tenant with poor credit.
If you have more questions regarding how to get a credit report, just leave a comment below.
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