Home   TrackCards   Credit Card Debt Stats   Credit Counselors

Q&A: Tenant Screening

September 14, 2012 by Shawn

If you happen to own rental property, this Q&A helps show the value of doing a tenant check before renting out your unit…

Q: I own a rental unit and here’s my question: If I have a questionable tenant…the type who’s always late with the rent, is there some way that I can get this noted on his credit report?  I would love to notify the credit reporting agencies about this, but it seems like that’s only an opportunity for larger lenders and companies.  Short of that, is there some other way I can ensure that his future landlords can be aware of his history?

A: At first, this seems like a straightforward question, however,  credit reporting is a complex topic, as it is and is governed by the Federal Fair Credit Reporting Act.  This law is intended to ensure accuracy and reasonable privacy for consumers, but it does make the process more cumbersome. Unfortunately, individual property owners cannot contact credit reporting agencies directly to report late payments of their individual tenants.

What you can do in the future, however, is sort of turn the logic on it’s head.  When your current tenant moves on, and you find yourself looking for new tenants, you CAN use their current credit history to determine whether or not to let them rent your property.  In other words, while you can’t add to anyone’s credit history, you can certainly look it up.

Pull the prospective renter’s credit history, and you’ll know if they are demonstrating a history of meeting their financial obligations in a timely way.  Credit history does need to be viewed with a bit of caution, however.  Don’t go overboard if you see a few single missed payments here and there…that’s quite common.  What you do want to look out for is a repeating problem, especially when payments go more than 30 days overdue.  You might also want to look for a pattern of related behavior, like bankruptcy filing.  Not that a single filing is cause for alarm, especially if you see a solid history following the filing.  However, more than one bankruptcy filing is certainly a huge red flag.

It’s also advisable to check for eviction notices.   In many municipalities, eviction notices are public records, and any reputable tenant checking service would be able to search those records if they are available.  This can tip you off not only to renters with a poor payment history, but also renters that have other undesirable behaviors such as abuse or destruction of property.

Lastly, we recommend doing a criminal background check.  There’s often a high correlation between habitual non-payment of rent, and other behavior that might produce something on a criminal background check.  For example, continually avoiding payment of parking tickets may eventually show up as a “Failure to Appear” and show in a criminal background check.

On your current situation, the best course of action you can really take is to go ahead and do an officially filed eviction.  While it doesn’t show directly on a credit report, it does, as explained above, often show up when landlords do a tenant pre-screening check.


What do you think? Join the discussion by leaving your comments.

©Copyright PlasticEconomy.com 2006 - 2013. All rights reserved.
About  | Contact Us | Privacy Policy | Legal Notice