If you are a landlord then you would have to be crazy not to use credit checks to vet tenants. You may just want to call up a few of their references, like old landlords or their employer to ask about them, or maybe you would rather pay a company to do this for you.
The reason for running credit checks is to minimize the risk on the part of the property owner. As much as landlords would want to weed out applicants who are likely to cause issues later on.
Whenever someone applies for a lease they have to put their name, address, social security number and when they were born on the form. This is all you need to do a decent credit check on them.
All landlords are required to inform possible tenants they are going to perform a credit check. Usually this notice is found on the application and the interested tenant has to sign a consent form before the landlord can run a credit check.
If not, then you should get this consent on another form, as it is vital that you have permission. No matter how you get it, make sure you do.
Quite frequently, due to time constraints, most property owners will hire a specialist company to do the check. This can be costly, and often the property owner will pass this cost on to the potential tenant.
Depending on whom you use, the company will either give you a price for each check or they will charge an annual amount for you to subscribe to their service. As well as doing normal credit checks, they will often be able to scrutinize employment and criminal pasts, former rental issues, insolvencies and all other pertinent information.
To comply with the Fair Credit Reporting Act, landlords must inform applicants in writing if they fail to meet eligibility requirements to rent the property. They don’t need to disclose the exact reason for rejection as long as it is stated that the decision was made as a result of the credit check.
This writer has been writing on personal finance for the previous five years. Moreover, this author takes pleasure in contributing information about New York City neighborhoods, like apartments in Chinatown in addition to Lincoln Center apartments.