Landlords have to protect themselves in numerous ways, and one of the most important things they can do is check prospective tenants’ credit reports. A tenant’s past makes it much easier to determine whether they will pay rent reliably and are worth keeping on as long-term tenants or if they will be more trouble than they’re worth to deal with.
Why Is a Credit Report Important?
The reality is that eviction is a complex process that frequently ends with your renter staying in your property for free for the duration of the term. Evictions are avoided at all costs by seasoned landlords and property managers.
Even requesting a renter to authorize a credit report — rather than actually getting the report — will deter tenants who are aware of their poor credit history. This is especially true if the renter is charged a fee for the application and credit report (we charge $30).
We still advise you to obtain the report. Because you're enabling someone to remain in your home before you get all of the payments, you're effectively offering credit. You need to know that they'll be able to pay you in the future.
What’s on a Credit Report?
Delinquent accounts and debt amounts, real debt and payments required to fulfill it, and payments made on trade accounts are all included on a credit report.
Credit Report: The first is a summary of how many accounts are past due, the current debt balances, and the credit score. The credit score is a numerical number assigned to a person's credit worthiness that is widely employed in various businesses.
Actual Debt and Required Payments: You'll be able to see how much actual debt an applicant has and how much money they'll need to pay each month to pay it off. Usually, the tenant’s income should be three times the amount of monthly asking rent
Trade Accounts: You may examine each of their trade accounts to see how promptly they've paid in the past. You'll see a month-by-month visual display that shows whether they've paid on time, 30 days late, 60 days late, 90 days late, or more than 120 days late. They'll probably pay their rent on time if they can pay their other bills on time.
Source: Laurence Jankelow (Avail.co)
Read the fourth part here: The Criminal History Check
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