What To Look For In A Credit Report For Landlords

Prior to accepting new renters, it is crucial to include a landlord credit report in your tenant screening process. Landlord credit reports are not only limited to actual credit scores and ratings. In fact, by running a report through the proper services you can learn much more about prospective tenants. As a landlord, it is necessary to screen a variety of items in order to effectively gauge the individuals you are renting property to. Continue reading this post to learn what to look for in a credit report for landlord before accepting new tenants.

Prior Issues With Debt

You first need to assess if clients have incurred any previous issues with debt. Within your credit check, the first items you need to assess are current loans, credit history, credit score, late payment histories, and previous bankruptcies. This information helps you make a quick judgement of a renters prior issues with debt. Document this information in order to calculate an applicants debt-to-income ratio. You may not want to rent to tenants with debt-to-income ratios over 40% . Applicants with ratios this high may not prioritize your monthly payment compared to other financial obligations. Within your credit check for renters without a previous debt history.

Estimate Current Debt Capacity

Analyze prospective tenants currents debts to estimate their current capacity. Understanding this information helps you clearly predict a tenants ability to make payments on a monthly basis. Tenants currents debts have a significant impact on their ability to meet rent payments. Under a renter application, you likely already have access to an applicants’ job and annual income. If potential renters have a low-income, but also make car, phone, student loan, or child support payments, meeting your rent deadlines may not be a priority. Applicants with high-incomes and low levels of debt will likely prioritize consistently meeting payments every month. Estimate your potential renters current debt capacity during your tenant screening process and credit report for landlords.

Public Records Evictions

Within your tenant screening process and landlord credit checks, search for prior public records concerning evictions or foreclosures. You can easily check public records on the internet throughout your process. Public records will provide you all the information needed regarding prior foreclosures, evictions, claims-against, and bankruptcies. If rent-applicants have a history of any of the previous, it is likely they are unstable and trustworthy renters. Even if potential tenants have a reasonable explanation, it is difficult to excuse things like bankruptcy or significant legal claims. During your apartment credit check, ensure potential renters do not have recent public records of evictions.

Consistent Payment Patterns

Gauge credit score and other factors within your landlord check to determine if clients are able to make consistent payment patterns. As with any form of property rental, consistent payments are integral for landlords to be profitable. Within many factors of your screening process you want to assess stability. Rent-applicants that have remained at the same job for a number of years, thorough credit history, and low debt amounts. If a credit check reveals that clients have a history of making incurred payments on time, chances are they will be a stable renter. Look for prospective renters that exhibit consistent payment patterns.

Previous Down Payments On Debts

Look for the previous down payments that rent-applicants have made on previous large scale debts. Sometimes you may have to dig further within credit reports to access this information. However, it can be vital to understanding an applicants financial responsibility, payment patterns, and stability. If potential tenants constantly put forth the minimum down payment or meet minimum payment amounts, you can assume they are not as financially responsible as those who seek to immediately repay debts. Renters who repay debts quickly will likely treat making your payments with the same urgency and promptness. Within your tenant credit report, research clients previous down payments on large scale debts.

During your tenant screening process, it is vital to pull a landlord credit report on prospective renters. In addition to their actual credit score, these reports allow you to learn much more about potential renters. Look to learn about clients previous debt issues. Search if prospective renters have had any prior bankruptcy statuses. Assess their current debt load to estimate their ability to meet payments. Check public records to ensure of any prior evictions or foreclosures. Look for tenants that appear to exhibit consistent payment patterns. Furthermore, assess their previous down payments on large debts. To learn what to look for in a credit report for landlord before accepting new tenants, consider the points mentioned above.