Conducting credit checks on prospective tenants is imperative because this gives the landlord information on the tenant’s history and financial habits. This ensures that landlords only let in people with an impeccable history of paying on time and no financial misgivings. This is important for landlords since their income depends on the tenant paying their rent on time. However, conducting credit checks cannot be done all willy-nilly, which is why we have chronicled the process of conducting a credit check on a prospective tenant.
Conducting a credit check on prospective tenants can mean the difference between having tenants who pay on time and tenants who can have problems regarding their finances. Furthermore, depending on what the landlord is willing to pay, the content of the credit report might vary, so to ensure the landlord gets the best and most responsible tenant, no expense needs to be spared for the renter’s credit check.
Now, let’s look at how to conduct a credit check on a prospective tenant.
Conducting a credit check on a tenant
Since the property is an investment, and the rent from the tenant is considered a return on investment, you might want to ensure that the RoI is not affected by any circumstance whatsoever, which means you will have to run a credit check even if the tenant might seem like the person who pays their rent without any delay. Let us first look at the core tenets that a credit check might let you in on.
What will a credit check tell you about the tenant?
An in-depth and in-detail credit check, which is legal once the tenant provides sufficient consent, will reveal the following about the prospect.
First and foremost, the indicator of financial responsibility. That is the credit score, which reveals everything you need to know about the tenant. A credit score below a certain level may become infeasible for the landlord, as this is a sign of financial issues that affect the rent.
Social Security verification
Social Security Number and other particulars are also shown in a detailed credit check, and these particulars will also paint a picture of how the potential tenant has been in their dealings, especially financial.
Arguably, the most important aspect of a credit check. Employment history can be an indicator of the economic stability of the potential tenant. Too many job switches or layoffs might be a sign of problems with the tenant, which could also show up in their dealings with the landlord as well. It also lets the landlord know of their current paycheck, and combined with their credit score, one can get a pretty good idea of how the tenant will be financially.
Fraud/ previous convictions (if any)
A detailed credit check will also inform the landlord of any potentially fraudulent activities that a tenant might have been engaged in or any felonies related to fiscal matters that might have resulted in a conviction. While it is always a good step to give people a second chance and to let them atone for their previous misdeeds, for some individuals, that might not be the case. If you are a landlord and you want to run a credit check on a potential tenant, pay extra attention to this section and ensure you do not miss any signs of such previous activity or convictions. This can make all the difference.
Running a credit check on potential tenant: tips to know
While running a credit check on potential tenants is easy, this process can be further simplified if you keep these tips in mind and follow up on them. Again, these are important since they might save you from all the hassle of reading and deciphering the credit check report. Let’s start with a simple one.
Ask the tenant for their credit report
Many landlords actually prefer this step over having their own one or purchasing software for doing so. Tenants themselves are usually aware of the requisites for renting an apartment or home, and some might even provide their own report right at the onset of negotiations. However, sometimes, tenants might not do so upfront, so, as a landlord, you can always ask the tenants to give you their credit report. If everything is in order, they will comply without any issues, and if they balk at the suggestion, this might be a sign of some issues. However, do practice caution if you decide to go down this path: some tenants might be able to edit the report to tamper with the numbers digitally, so always take this tip with a grain of salt.
Request report from the credit bureau
Apartments and homes that might come under the ambit of a property management company usually have access to credit reports at the reporting agency itself. They can then use the tenant’s application to acquire a legal credit report on the tenant. While this might not be available to singular landlords not part of a property management system, they can still use other methods and software to run a credit check on a potential tenant.
The rundown on credit checks for potential tenants
Many people complain of credit checks as impinging on their privacy, but the fact is that the stakes for landlords are too high to ignore or willfully not pay attention to the renting party. Since a property might be their only source of income, they reserve the right to ensure that the potential tenant has a flawless financial background and has an impeccable history of paying their dues on time. If they fail to do so, they might rent out and depend for their income on a person who might not be the most trustworthy and could skip town. This is why credit check reports are imperative in ensuring that the landlord gets their return on investment against the investment or property that they have rented out.
Toronto Boutique Apartments: leave nothing to be desired!
Toronto is a beautiful place, filled to the brim with sights and places to behold. While in Toronto, you need a place to unpack and recharge, and Toronto Boutique Apartments (TBA) has apartments that are as beautiful as the city itself. For the best short-term rentals of townhouses, one-bedroom, two-bedroom, and three-bedroom apartments, and other residential solutions, check out TBA and their list of rentals at incredible locations peppered throughout the city. Make your visit an unforgettable one as you are treated to a stay at some of the most luxurious and well-appointed locations in the greater Toronto area (GTA).