A lease is an agreement between a landlord/landlord and a lessee/tenant whereby the former agrees to rent their property for a fee and subject to a lease, while the latter agrees to pay regular amounts as rent for the property. continued use of the same property for a specified period of time. Finding the perfect tenant is not what this article is after, rather it will strive to provide the landlord with enough information and reduce the risk of renting a property to a dead man.
Credit Check for Homeowners: Defined Credit Inquiry
A landlord credit check is a request by an interested person for the credit report and credit rating of another person (natural or legal) for a specific legal purpose and with written authorization to do so. Remember, not everyone can request a landlord credit check from credit reporting agencies. The request must be accompanied by a written authorization and the requesting person or entity must indicate the purpose of the credit inquiry as a credit check on the tenant. The reason for this is because the law limits credit inquiries to protect the financial information of the natural or legal person.
Credit Check for Landlords: Credit Reporting Agencies
These are private corporations operated for profit. There are three or four major credit reporting agencies in the United States. The important thing to remember is that while it’s safe to request a credit report and credit score from only one credit reporting agency, you may want to get 2-3 different reports from the major credit reporting agencies. This is because each credit report may not contain the same information and may not contain the same forms.
Credit check for homeowners: credit score
A credit score is the numerical equivalent of a natural or legal person as a risk. In theory, the higher the credit score, the lower the risk of default, and the lower the credit score, the higher the risk of default. There is no hard and fast rule here, however most landlords look for:
- Federal and State Median Credit Score: At a minimum, a tenant must be within the median credit score.
- Past Lease Defaults: Past lease defaults are indicative of a propensity to not pay rent on time.
- Total amount owed: This shows the landlord if the potential tenant still has the ability to pay the rent.
Remember, the lower the score, the lesser the tenant’s bargaining power. This also means that the landlord is justified in charging more rent per month or requiring a security deposit and deposit up front. The landlord should also insist on postdated checks for the entire duration of the lease, as these allow the landlord to strictly enforce payment under threat of litigation.
last minute tips
In addition to the landlord’s credit check, the landlord also has other means to get a better picture of a potential tenant. These other methods are part of a larger investigation of the potential tenant. These consultations are readily available online for a fee and may include the following:
- Criminal Background Check
- Medical collection control pending
- Employment Summary Verification
- Alias check
- Checking previous address history