How to screen tenants without a hard credit inquiry

Question

For the second time in a row, I have had a potential tenant ask me whether my screening process involves a hard credit inquiry rather than a soft one. Last time, I checked with my screening service, which gives me a score of 1 to 100 for the applicant, taking into account credit as well as criminal and eviction records. The screening service rep said it's a hard inquiry and has to be that under government regulations for a situation in which the person is applying for something. I didn't get a precise understanding of those regulations.

In that case, I thought the prospect's concern was legitimate, because he was buying a house and planned to apply for a home loan. Rather than have the screening service pull credit, I let the potential tenant show me his scores online, and things worked out fine.

In this new case, I can't easily have the potential tenant show me something online, because I am out of town. I'd have to get him to show me his scores online via Skype or something.

Do you have any suggestions for getting a tenant's credit score without a hard inquiry? I could ask the tenant to send me a report from annualcreditreport.com or something, but of course it seems questionable to accept something with which the applicant could have tampered.

Llewelyn A. · Answer

My 10 step Screening process is sort of like this:1) Ask all Applicants to Go online, get your credit score from any source you may have such as a Credit Score, etc.2) Complete the Application so I have your SS#, Driver's License, Employment History and current Landlord with Rental History.3) Get a letter of recommendation from your current Landlord.4) I select the best applicant.5) I will also pull a Background and Court Check on that selected Applicant, but not on the others. If current Applicant fails on any of the next steps, I will begin processing another applicant.6) I will then ask the Applicant to pull their own credit, usually from MyFICO.com- This won't be an inquiry as it's being pulled by the applicant themselves.- If the Credit Score matches the one in 1) then that's corroborating the tenant's story.- If the Credit Score does not match, then I need to do a HARD Pull and will inform the applicant that will be the case.- By the time I get to this point, I don't believe any professional tenants would move forward.7) Call up the current Landlord Reference, making sure they are in good standing as indicated in 3)8) Ask the Applicant for 1 final set of information, 6 Months Bank Statements.- This is to ensure that the Applicant did not give me a bogus Current Landlord reference and that I can match the rent he paid on his Bank Statements.- If I can't match it, I ask for solid proof... something that must convince me this was not a set up by a professional tenant. If they can't, sorry, go on to next applicant.- Basically, if you are a professional tenant, you wouldn't NOT has paid your rent anytime within the last 6 months. If I see any issues, the process stops and I start my back up applicants.9) Schedule Lease signing.- Applicant must show me their Credit Score on their Laptop or Cell Phone sent to me in 1). If I am doing an electronic signature (I use DocuSign for this), then I will ask them to go onto a Screen Sharing Software (I use gotomeeting.com) and ask them to log into their Accounts to verify their Credit Information.10) At this point, Applicant has been fully verified and is now a happy tenant!I can usually get all of this done electronically and within 1 or 2 days if it's during the week where I can make calls to verify Employment.No need to even do it in person although I like to meet the tenant at least once!

Kristina Heimstaedt · Answer

I have no record of how they are with bills. Account Closed I want to know that if I'm going to allow someone to be in possession of my asset that they will pay their bills. Keep in mind too that I'm in California where most laws favor the tenants severely. If I can screen this out to protect myself, I will. I've also, turned people down because they told me that they haven't paid taxes in 2 years. I'm in an expensive market with a solid applicant pool. I can afford to be picky.

Chris Mason · Answer

Trick question.I'll throw it back at you:Grab any non-consumer-facing credit report. Can you show me where the word "hard" or "soft" appears anywhere next to the list of credit inquiries? It doesn't. :PHence creditors can advertise "no hard inquiry will appear on your credit" without getting in trouble. It's true. The word "hard" is not to be found on the list of credit inquiries, so that is a true and factual statement, even though it is misleading.What consumers expect when they say "soft pull" is only possible when the creditor/landlord/etc does not require your name, your dob, your ssn, or your consent. If you have a Wells Fargo Visa card, they get a copy of your credit report every month, and can double click to open it (or not) as they see fit, without your consent, knowledge, or providing of any additional information. So if you call your existing creditor and ask "WTF, how did you know I am thinking of getting a car loan?" and they say "it wasn't a hard pull," that's true enough, they just double clicked to open something they get on a monthly basis as "subscribers" to your credit (you consented to this in the small print) -- your entire current credit report. It's also how if your FICO jumps up from 660 to 740, your lender might get a ping to call you to offer a refinance. That phone call's timing isn't a coincidence, we get little automated pings (that lack details, for compliance reasons I'm unclear on) telling us about your FICO jump.Other than that, the concept of the "soft pull" is BS that I think was originally made up by cell phone salespersons. TLDR: If someone is asking for your ssn or consent, it's a credit inquiry.

Joe Splitrock · Answer

@Bob Hucker I use Cozy, which is a soft inquiry. Applicants technically run the report themselves, then share it with you, so you see the report after they allow you to see it. But you are viewing it online directly from the source.https://cozy.co/for-landlords/credit-reports/

JD Martin · Answer

YUP. Pull your own credit reports! Imagine someone applying for credit doing this anywhere else - and make no mistake, the tenant is applying for credit with you - either in the form of a one year lease in $X amount, where you allow them to pay it in 12 installments, or in an open-ended month-to-month arrangement where they will be possessing the property until they give notice or you give notice and manage to get them out of there. Imagine the tenant walking in to the furniture store with their own credit report, and saying "OK, I'll take that living room suite, here's my report". You can't imagine it because no one else would do it. Why anyone would trust a stranger's representation of themselves without independent verification is beyond me. OP: if he's applying for a mortgage and it shows up on his report, too bad. That's the cost of doing business. Stay on your brother's couch until you get a mortgage. Or explain the pull to the bank.

Mike S. · Answer

Transunion Smartmove is considered a pull by the tenant, so it is a soft inquiry.

Wesley W. · Answer

Seems like if they were entering into a year-long contract (my assumption in this case) for housing, the "squeeze" of having a single hard pull is very much worth the "juice" of a year's worth of housing. These major applications regarding credit are usually tied to major purchases and shouldn't occur very often. When there are A LOT of hard pulls in short time that is what triggers a red flag for subsequent creditors.

Matthew Olszak · Answer

@Bob Hucker I wouldn't alter your process to appease 1 or 2 applicants. A single inquiry doesn't hurt that much, and even if they are right on the borderline to qualify for a mortgage, unless you are running a short-term rental they'll have a year to get it back up anyhow.

Thomas S. · Answer

One step in my screening process involves applicants that asks if they can provide me with a copy of their own credit score/report. My experience has shown that this is a major red flag that will usually end up leading to a applicant that will be rejected.I would never accept a credit report provided by a applicant. Chances of fraud is astronomical.

Patrick M. · Answer

@Bob Hucker there is just so much you can guard against- but if I worked off of just scores I would be more worried about them changing that- that would be simple.I am very welcoming of inquiries by tenants as to their credit. I tell them that their credit is only a factor I will consider. If someone went through a bad divorce or medical emergency and it devastated their credit I don't want them to be reduced to a number.