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How do I Conduct a Tenant Credit Check?

Tricia Christensen
By
Updated May 16, 2024
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Landlords need to know that tenants will be responsible and pay their rent on time. For many who own property that they rent out, one of the best ways to do this is by doing a tenant background check. With permission of the prospective renter, a landlord can verify things like proof of income, work history, rent history and credit rating. Many landlords are able to do most of this verification on their own, but they may require some extra help when it comes to conducting a tenant credit check.

Credit rating and any poor credit history is generally calculated by one of several credit reporting agencies. The most common used in the US are Experian®, Equifax® and TransUnion®. These agencies offer the ability for landlords to check credit from all three agencies for a combined score. This typically costs money, and price varies depending on the agency performing the check.

In addition to reports from credit reporting agencies, there are numerous private companies that can run credit checks through the various reporting bureaus. For landlords or property companies with many rental properties and the frequent need to perform new credit checks, some companies offer a subscription service that may reduce fees. Other landlords merely ask prospective tenants to pay a fee to check their credit. The latter method can be frustrating for those who must pay this fee more than once if applying for several places to live, because many landlords won’t accept a credit report they did not initiate.

Those who want to run a tenant credit check usually need to obtain signed permission for credit checks to be performed. Companies that offer credit-reporting services tend to require proof of this permission. Landlords will also need to obtain full names of those who will be responsible for paying rent and social security numbers of potential renters.

Though agencies may boast of their ability to make sure that a tenant credit check verifies good rental history, this may not be something that appears on a credit report. The only way poor rent history shows up on these reports is if landlords who were not paid or not paid on time took action and reported it to a credit reporting agency. This means the average check may not say that much about the specifics of rental history and rental payments in the past. A better measure of ability to pay rent may be by speaking with former landlords to verify good rental history.

What a tenant credit check can do is help a landlord determine if a potential renter has a history of not paying other types of bills, like utility or credit bills, or if they have bankruptcies within the last ten years, or other large unpaid bills. They can also evaluate debt to income ratio. Again, these don’t necessarily influence the ability for a prospective tenant to pay rent, and many people with large bills are quite capable of meeting their monthly rental payments.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Tricia Christensen
By Tricia Christensen
With a Literature degree from Sonoma State University and years of experience as a SmartCapitalMind contributor, Tricia Christensen is based in Northern California and brings a wealth of knowledge and passion to her writing. Her wide-ranging interests include reading, writing, medicine, art, film, history, politics, ethics, and religion, all of which she incorporates into her informative articles. Tricia is currently working on her first novel.
Discussion Comments
By staceybeck01 — On Oct 15, 2013

Thanks for all the great advice. I was really confused about what tenant screening was but it all makes sense now!

By oasis11 — On May 12, 2011

@Latte31 - I agree with what you are saying. Sometimes you just don’t know people like you think you do. I wanted to say that an applicant with obvious credit problems like that is easy to decline, but what about if the applicant just suffered a foreclosure like many people recently have.

If they had a perfect credit history until then, what would you do? I say this because there are a lot of responsible homeowners that bought properties with the wrong mortgages, or that may have lost their job for a few months and now have a new one but their credit suffered in the meantime.

I think that there are a lot of potential renters that fit his dynamic because the high amount of foreclosures. In some way I would want to give someone like this a chance because they fell on hard times and maybe deserve another chance. They have to live somewhere.

By latte31 — On May 12, 2011

@Comfyshoes - I also agree that these tenant credit check services are wonderful. I had a friend who had a great rapport with a prospective tenant until she saw her credit report.

The applicant had five evictions and over 20 charge offs. In addition, she lied about her current address and gave false employment information. Unfortunately you cannot rely on a gut feeling anymore when renting to people because sometimes the person that seems to be the perfect applicant is can actually be a nightmare in disguise.

By comfyshoes — On May 10, 2011

@Suntan12 - I just wanted to say that when you deny renting to a rental applicant, I believe by law you have to give them a written reason as to why they are denied and keep a copy of the letter along with their credit report in their file.

I know that these tenant screening services are a lifesaver because they usually give you the information that you need almost instantly. That is important because an applicant might look for another property if you take too long with their acceptance or denial as a prospective tenant. That has happened to me, so I use a service that gives me instant reports on my applicants 24 hours a day.

By suntan12 — On May 08, 2011

I think that it is really important to get a tenant credit report. I know that I always perform a tenant credit screening in order to determine if I should rent my property out to a prospective renter.

I actually do a background and credit check to make sure that the tenants do not have a criminal history. I use a tenant credit check service that runs the credit checks for a flat rate. I then charge the applicant the same fee in order to cover it.

It makes renting to prospective applicants easier. The company that I use charges a flat rate per screening and does not have the monthly fee requirement. I like this better because I don't want to have to sign any contracts.

Tricia Christensen
Tricia Christensen
With a Literature degree from Sonoma State University and years of experience as a SmartCapitalMind contributor, Tricia...
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