The Red Flags You Should Watch Out for Following a Tenant Credit Check

BY: HOUSERIE 10/27/2017

A tenant credit check gives landlords information about a prospective tenant’s borrowing history and indicators of their financial responsibility. Depending on the agency that runs one for you, it will show you a person’s outstanding debt, loan requests, payment patterns, and public records. It could even inform you about other parties that have recently requested credit checks on that person.

The tenant credit check is one of the most significant tools for deciding whom to rent out your property to. But once you get that comprehensive credit history, which details should you focus on?

The following details are the hallmarks of an unfavorable credit check:

  • Consistent late payments. You want a renter to pay rent on time. Punctuality isn’t so much the issue here as responsibility. If a prospective tenant has a history of paying late, that might mean he or she does not have a stable source of income to meet regular bills, or else is simply lax about obligations.
  • Unpaid accounts/collections. As they say, better late than never. A prospective tenant who leaves dues completely unpaid will be a worse candidate than someone who pays the bills but not always on time.
  • Large debts. Like business investments or student loans, these debts may exist even if a person pays rent regularly and responsibly. However, you need to know if a prospective tenant has any such obligations because these debts can command a large portion of their income. When push comes to shove, these other debts might take priority over paying the rent.
  • Tax liens and bankruptcy filings. Anytime a person’s debts become entangled with legal action, you know their credit history cannot be good. If they cannot pay the government its dues, how can they pay you?

What should I do about an unfavorable credit report?

The ostensibly sensible way to handle an unfavorable credit report is to decline that prospective tenant’s application. But note that these red flags come on a scale from bad to worse.

If an applicant fits your tenant preferences or impresses you in other criteria – like no criminal background and good reference checks – you should also consider their individual situations. There might be a reasonable explanation behind the red flags.

For example, the applicant might have briefly lost their job during the recession. Though they left bills unpaid for several months, they might have secured steady employment and paid all bills on time since then. In other cases, a former spouse or partner might have run up debts in the applicant’s name. With that relationship ended, the applicant’s true financial responsibility can become known.

This only goes to show that a tenant credit check is integral to evaluating a renter. The hard-and-fast figures might not be the sole factor in your final decision, but delving into them can certainly help you select one applicant over another.


How to Run a Credit Check on a Prospective Tenant,

How to Interpret Your Tenant’s Credit Report,

Understanding a Tenant’s Credit Report,


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