Getting rent on time can only be secured through a detailed tenant credit check. In more ways than one, being a landlord can be a risky business. You talk to a possible tenant, agree on terms and pricing, then, if everything goes well, you get a tenant who happily lives on your land and abides by your rules. The problem here happens when they do not end up following the last part. In this case, you will only keep losing money while chasing after a delinquent tenant who cannot pay rent.
Mostly, this is why we do a tenant credit check. By learning more about someone’s financial capacity and previous credit behavior, you can more easily gauge whether this particular person is trustworthy enough to keep their part of your lease agreement. But there is just one problem. Realistically speaking, you can’t just reliably ask a person about their previous financial history. Some people may lie, and you would need a legal way to pry that information from them. This is why many beginner landlords always come up with the question: how do I run a tenant credit check?
How Do I Run A Tenant Credit Check?
Tenant credit checks are, in a sense, something you can do on your own. Using information that is legally available in public, you can report someone’s credit history based on their employment history, criminal history, professional training, and even their credit background. You can access all of this information through public records and are free of charge in most cases.
However, doing a tenant credit check on your own is a time-consuming process. And if you are a landlord in talks with a prospective tenant, you can’t just ask the latter to stay homeless while you run a credit check on them. That is why professional background check services exist. With these services, including our own, you can rest easy while waiting for the background report to clear. In most cases, you can have the report in about two days instead of doing it on your own, which could take months.
What Do I Need to Run A Tenant Credit Check?
Whether you decide to run a tenant credit check on your own or through a background check service, you will still need to prove your identity for the registry offices. Usually, you will only need an ID, proof of rental property, and a document that shows your current address. The last one can be a utility bill such as a water or electric bill. It is also essential to have the future tenants\’ consent and authorization in writing before performing any checks.
If you choose a background check service, be it ours or another company, you may find yourself needing a few more documents and have to wait for up to 10 days to get approved to run a tenant credit check. If possible, you should always try to get yourself approved as soon or even before starting your rental business. This removes the hassle of waiting for verification for your first prospective tenant.
When Should I Do A Credit Check?
For some landlords, the problem is not “how do I run a tenant credit check” but “when do I need to run a tenant credit check.” The answer here is both tricky and simple: you should do it as soon as you verify who they are.
Besides the standard name and age, you should ask them for their previous employment history or where they are currently working. This way, you can verify that you are talking with a legitimate person and not actively trying to obscure red flags. If they do end up trying to hide these facts, which you should reasonably know, then you might want to avoid having them live on your property.
How Do I Run A Credit Check for Someone Who Already Lives In My Property?
Although not unheard of, some tenants may choose to ditch or postpone the tenant credit check and immediately form a contract. While we do not recommend this, it is ultimately up to you if you decide to avoid the tenant credit check. When you do this, you can still do the tenant credit check afterward if you want to be sure.
However, it would help if you understood that these credit checks are only there to help you decide whether someone is trustworthy or not. If your tenant already pays their dues at the right time every month, then you probably have all the reasons to trust them. You need to be more careful next time, just in case you get a bad prospective tenant.