What Should You Look for in an Applicant’s Credit Report?
Now that you have your prospective tenant’s credit report, how do you interpret all this information? In general, keep an eye out for the following:
Lack of sufficient credit history: If the report does not have much information about your applicant, it means they probably don’t have enough financial activity for you to have a clear idea of their credit history. This is not a bad situation per se, but you should still be aware of this and look for other ways to confirm your applicant’s financial responsibility.
Negative or Potentially Negative Items Section: The name of this section might change depending on the company, but it’s usually on the first page of the report. It summarizes important points for your consideration, such as accounts that are past due or discharged.
Bankruptcy, eviction or foreclosure on a home: Needless to say, if your prospective tenant has been involved in any of these situations, you can assume their financial actions in the past have been questionable.
Individual credit accounts: Keep an eye on information regarding late payments. Has your applicant been constantly late in paying their debts? How many days was your potential tenant delinquent?
None of these indicators is individually sufficient for you to reach the conclusion that your applicant will be a bad tenant. They are indicative of bad financial behavior in the past, which may or may not replicate in the future.
- What Is a Rental Application Form?
- Should You Use a Rental Application Form in the Tenant Screening Process?
- What Information Can You Find in an Applicant’s Credit Report?
- Where Can You Get an Applicant’s Credit Report?
- Can You Refuse an Applicant Based on a Poor Credit Report?
- How Can You Verify the Income and Employment History of an Applicant?
- Can You Require Applicants to Pay an Application-Screening Fee?