THE Credit Report! ...for self management.

[Jem J.]

Hello BP!  Anyone here who can give me the " how to" of credit report checks for prospective tenants? I am finally doing this on my own to avoid the high cost agent's fee. I have interested applicants for my June opening. 

Anyone here uses www. annualcreditreport.com?

Any recommendations/ suggestions are appreciated!

Thanks!!!!

Jem 

[Steve Babiak]

This snippet was taken from the link supplied by @Rick S.:

“Anyone who uses a credit report or another type of consumer report to deny your application for credit, insurance, or employment – or to take another adverse action against you – must tell you, and must give you the name, address, and phone number of the agency that provided the information.” Source: www.consumer.ftc.gov

So the problem you will face if you don't get a report that was generated by one of the bureaus is that your adverse action letter will not be able to comply - and thus the applicant will be unable to dispute the derogatory information that led to the adverse action.

So, use a service that is intended to be used for tenant screening. I have been using tenantreports.com lately; I get a discount code from being a member of certain real estate groups, and with the non-discount price being reasonable to start my discounted price ends up less than what other landlords are charging for their application fee.

There are other tidbits contained in the credit report that are quite useful in tenant screening. First, there will be an address history of places where applicant resided when applying for credit; use this to verify address history that the applicant supplied to you with the application. And use this to contact ALL former landlords that owned the properties wherever the applicant previously refused.

You also use the credit report to compute the applicant's DTI (debt to income ratio). If an applicant has too large of a monthly debt payment, you could end up finding them unable to make some payment - that payment could end up being the rent (or a utility bill).

Some landlords (like @Rob K. ) don't want tenants that are renting furniture - the credit report can show these (Rent-A-Center or Cort for example). And you don't want tenants who will be unable to get utilities in their own name - unpaid utility bills showing on the credit report are the indicators for this. You probably don't want an applicant that has their credit report showing numerous changes in phone service, because they get the phone disconnected and then you will be unable to contact them.

That's just some stuff that you can do with a credit report. And NEVER let the tenant give you their credit report (unless you are one of those unfortunate landlords who have the rental property in a state where state law mandates that landlords accept these - I believe WI is one of those); always try to get the credit report from your reliable reporting service.