How Does a Landlord Do a Credit Check on a Tenant?
Landlords have a choice of services that they can use to run a credit check, and there are federal laws that must be followed when using a credit check to make a decision about a prospective tenant.
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Tenant Screening
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Most landlords want to screen tenants before renting to them. The screening process may include a criminal background check, talking to previous landlords, and a credit check.
Credit Reports
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A credit report gives a landlord a snapshot of their potential tenant's financial condition. If the prospective tenant pays his other bills on time, chances are that he will pay his rent on time too.
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Getting a Credit Report Done
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Landlords that work with a property management company will typically have the management company run the credit report. Otherwise, there are several online services that will run credit checks.
Authorization
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The landlord will need to obtain the potential tenant's permission to run a credit check, and this authorization is usually a part of the lease application.
Federal Law Regarding Credit Checks
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If negative credit history plays any part in a landlord's decision not to rent to a tenant, or to request an extra security deposit or a co-signer, the landlord must notify the potential tenant according to the rules set down by the Fair Credit Reporting Act.
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