The average credit score in the U.S. is 711, which falls into the "good" category.
If you own rental properties, checking an applicant's credit score offers a way to judge whether they will be a good tenant or not. The downside is that you might wonder how to check tenant credit scores.
Checking a person's credit isn't difficult, and it's a great way to screen every potential tenant. Here is a guide to help you learn how to check a person's credit.
Ask the Tenant's Permission
Before running a tenant screening, such as a credit check, you must acquire the tenant's permission.
You can ask for permission on the application paperwork, and you should verify that the tenant signed the waiver before running the screening.
Getting their permission is vital, as it's illegal to run a person's credit without their permission.
If you're avoiding running screenings, it might be due to a lack of knowledge. It might also be due to a lack of applicants. If you're experiencing trouble finding tenants, start using different methods.
Gather the Right Information
Next, you should realize that you can't run a credit check without having the right information. Therefore, your application should ask the right tenant screening questions.
Here are some questions to ask to gather the right information to run a credit check:
- The applicant's full legal name
- Their birthdate
- The person's social security number
- Their driver's license
You may need all these details to run a person's credit, but it depends on how you run the credit report. The goal is to have all the information you need and a signed waiver before checking.
Run a Credit Check
When someone applies for a rental with your company, you begin by gathering the right information. Once you have the information you need, tell the applicant that you will get back to them about their application.
During this time, you can run the person's credit report to determine what their credit score is, as this should affect your decision.
Credit scores typically range from 300 to 850, which 850 representing perfect credit. A score that is under 630 generally refers to bad credit.
When tenants have bad credit, it increases your risk level as a landlord. Here are some of the potential risks of renting to someone with bad credit:
- They might pay their rent late each month
- They might not pay their rent at all
- You might have to evict them
- Their checks might bounce
If you decide to rent a unit to someone with bad credit, you can do a few things to protect yourself. First, you can ask for more money upfront. Secondly, you can charge them a higher monthly rental payment.
How to Check Tenant Credit Scores: Hire a Property Management Firm
Once you learn how to check tenant credit scores, you'll have a great way to screen every person that applies for a unit.
If you need help checking credit, running screenings, or finding tenants, contact us. We offer property management services and can help you with these tasks and more.