A lease is an agreement between a landlord / landlord and tenant / 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 use. continued ownership of the same property for a specified period of time. Finding the perfect tenant is not what this article is looking for, but it will endeavor to provide the landlord with enough information and reduce the risk of renting a property to a useless one.
Credit Check for Homeowners – Credit Inquiry Definition
A landlord credit check is a request made by a person interested in the credit report and rating of another person (physical or legal) for a specific legal purpose and with a written authorization to do so. Remember, not everyone can request a homeowner’s credit check from credit reporting agencies. The request must be accompanied by a written authorization and the person or entity requesting it must indicate the purpose of the credit inquiry as a credit check of the tenant. The reason for this is that the law limits credit inquiries to protect the financial information of the natural or legal person.
Homeowner Credit Check – 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 is safe to request a credit report and credit score from a credit reporting agency, it would be wise to obtain 2-3 different reports from the major reporting agencies. This is because each credit report may not contain the same information and may not contain the same forms.
Homeowner Credit Check: Your Credit Score
A credit rating is the numerical equivalent of a natural or legal person as risk. In theory, the higher the credit rating, the lower the default risk, and the lower the credit rating, the higher the default risk. There is no hard and fast rule here, however most landlords look for the following:
- 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 not to pay rent on time.
- Total amount of indebtedness: Shows the landlord if the potential tenant still has the capacity to pay the rent.
Remember, the lower the score, the lower the tenant’s bargaining power. This also means that the landlord is justified in charging more rent per month or requesting a security deposit and advance deposit. The landlord should also insist on postdated checks for the full duration of the lease because these allow the landlord to strictly enforce the payment under threat of litigation.
Last minute tips
Aside from the landlord’s credit check, the landlord also has other means of getting a better picture of a potential tenant. These other methods are understood from a more extensive investigation of the potential occupant. These consultations are readily available online for a fee and may include the following:
- Criminal background check
- Pending medical collection control
- Job summary verification
- Checking for aliases
- Checking the history of previous addresses