A landlord credit check is a means that landlords use to assess the type and amount of risk a potential tenant may have. In other words, credit checks are used to determine the likelihood that a tenant will be able to pay rent in full and on time. Of course, there is no way to say for sure, but an owner’s credit check and other background checks work on the assumption that the future action of a natural or legal person, to some extent, can be determined by past actions.

Owner credit: subject

The subject of a tenant loan can be a natural or legal person. The former are entities that are considered creations of the state, such as corporations, partnerships, agencies, and trusts. The latter are individual persons (human beings). Tip: Always be sure to ask who the designated tenant will be. Will it be a corporation, business entity, person, persons, etc.? This is because a corporation or other legal entities have a separate credit report, also known as a business credit report, and the person named as the tenant will be the one the landlord looks for first. For example, if the named tenant is the ABC Corporation comprised of Mr. A, Mr. B, and Mr. C., then the correct credit check would be for the corporation, not the individuals that comprise it. Why? Simple, because according to the law a corporation is separate and distinct from its members and, as a general rule, the responsibility of the corporation does not extend to individual owners.

Credit Check for Homeowners – Object

The purpose of a landlord credit check is to determine the likelihood that a potential tenant will pay in full and on time. A credit check or inquiry is one that provides the owner with information regarding the applicant’s past financial transactions on credit. By obtaining a credit report, the landlord can determine:

1. Amount of outstanding debt on credit
2. Past and / or current bankruptcy filing
3. The number of payment defaults (i.e. credit card defaults)
4. Wage garnishments

In other words, a landlord can determine the credit history and payment history of the potential tenant. This information can be translated to:

1. An approval
2. Deny
3. An approval but subject to higher rent, deposits, prepayment to offset risk.

Homeowner Credit: How

A tenant credit is made to the credit reporting agency of your choice. Of course, there are 3 or 4 major credit reporting agencies at the moment and the report may or may not include the score you may have for an additional fee. It is up to the landlord to determine:

1. Which credit reporting agencies to ask
2. To get more than one credit report
3. To take advantage of credit score / scores

However, it is important to note that a tenant credit check can only be obtained if the landlord requests a written authorization letter from the applicant for a credit check. Remember, request separate authorizations for each person of legal age to occupy the property.