How to Check a Potential Tenant's Credit

You’ve found the ideal tenant, but you’re worried they won’t pay rent on time. Looks can be deceiving, so you can run a credit check online to find out if they are financially responsible. Fortunately, a credit check doesn’t cost much, and you can ask the applicant to pay for it.

Part 1

Part 1 of 3:

Gathering Information

1
Obtain the applicant’s personal information. To run a credit check, you’ll need certain personal information from the applicant. Get the following:^{[1]XResearch source}
- Full legal name
- Date of birth
- Social Security number
- Previous address
- Landlord contact information
2
Get permission to do a credit check. Protect yourself by having the applicant agree in writing that you can run the credit check.^{[2]XResearch source} Put the permission on a sheet of paper that is separate from the rest of the application. You want it to stand out.
- Include a line for the applicant to sign.
- Remind the applicant that the fee you are charging will be spent on the credit check and won’t be applied to the security deposit.^{[3]XResearch source}
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3
Charge a reasonable fee. You can have the applicant pay for the credit check. However, the fee must be reasonable, and landlords generally charge $30-50 per check. You should probably scan the application to see if the applicant is someone you are considering renting to. If you can see right off that they aren’t, there’s no need to run a credit check.^{[4]XResearch source}
- It’s illegal to pocket the money and not run the check, so return any fee.
- Your state or local law might limit how much you can charge. You should research this issue or talk to an attorney.
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Part 2

Part 2 of 3:

Running the Credit Check

1
Find a provider. You have several choices. For example, you might contact one of the three national credit reporting agencies—Experian, Equifax, or TransUnion. Or you can use another online service, such as CreditReport.com.^{[5]XResearch source} Always shop around for the best deal.
- Experian lets landlords run credit checks for free.^{[6]XResearch source}
- Also check with your local apartment association, which might be able to get credit reports for a reduced rate.
You can request online. Provide the applicant’s personal information and pay for the credit check. You should receive the results quickly.
The first page of the credit report should list any accounts that are past due, have been discharged, or are in collections.^{[7]XResearch source} These are all signs the applicant has struggled keeping up with their bills.
These are other negative items that should appear on the credit report. If the applicant owned a home, any foreclosure action should also appear in this section.^{[8]XResearch source}
The credit report should also have payment information for each account. Check whether the applicant has been late on any account. The credit report should state whether they were 30, 60, or 90 days late.^{[9]XResearch source}
6
Pull the credit score, if you want it. A credit score might be included with the credit history, or you might need to order it separately. Generally, someone with a credit score above 650 is only a medium credit risk, with a higher score representing less risk.^{[10]XResearch source}
- Don’t rely solely on the applicant’s credit score, since there are reasonable reasons why it might be low. For example, someone might have a lower credit score because they haven't yet had time to establish a lengthy credit history.
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Part 3

Part 3 of 3:

Rejecting the Applicant

1
Make a decision on the application. Avoid using only the credit report to make a decision. Also talk to the applicant’s references and prior landlords. However, if you decide to reject someone based on the credit report, you will need to give them certain information.
- You might choose to rent but still take an adverse action. For example, you might want a cosigner on the lease, require a larger deposit, or increase the rent. If you take any of these adverse actions, you must also notify the tenant that the credit report contained negative information you relied on.^{[11]XTrustworthy SourceFederal Trade CommissionIndependent U.S. government agency focused on consumer protectionGo to source}
2
Give the applicant notice. Sometimes, credit reports contain inaccurate information. You need to tell the applicant so that they can review their application and fix any errors. Your written notice to the applicant should contain the following information:^{[12]XTrustworthy SourceFederal Trade CommissionIndependent U.S. government agency focused on consumer protectionGo to source}
- Include the name, address, and contact information for the company that gave you the credit report.
- Tell the applicant they can dispute the information and get a free copy of the corrected report if they ask within 60 days.
About 20% of credit reports have errors, so you might want to rent to the applicant if they can correct the error fast enough.^{[13]XTrustworthy SourceFederal Trade CommissionIndependent U.S. government agency focused on consumer protectionGo to source} Of course, you aren’t required to wait around. Instead, you can rent to someone else.
4
Dispose of the report safely. You must protect an applicant’s privacy. For this reason, you should properly dispose of the credit report once you are done using it. According to federal law, you must do one of the following:^{[14]XTrustworthy SourceFederal Trade CommissionIndependent U.S. government agency focused on consumer protectionGo to source}
- Shred, burn, or pulverize papers containing credit report information.
- Destroy or erase any electronic files that contain credit report information.
- Thoroughly vet any disposal company you hire. Ask for references and check that the company is properly certified.
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