Landlords may run credit checks on potential tenants to see how they handle money. Tenant screening may include rental history, income, and background checks.
Many landlords will check a potential tenant’s credit report, rental history, criminal record, employment status, income, etc.
The cost of tenant credit checks and screening reports is usually paid by the applicant, not the prospective landlord. Landlords are legally obligated to notify tenants if a credit check or inspection report is used to deny a rental application.
If you’re looking for a new apartment, the search can take a long time. When you finally find the right place, you might be surprised to learn that things aren’t always as simple as signing a lease. Your landlord may first want to run a tenant credit check — or even a more detailed tenant screening report – to determine if you’re a responsible applicant.
What is a Tenant Inspection Report?
A tenant screening report is similar to a credit report, but with added rental-related data. A typical report might not only look at financial history and confirm a potential tenant’s identity, but it might also verify rental history, on-time payment history, eviction records, or other legal actions by previous landlords. Landlords use tenant screening reports and tenant credit checks to make rental decisions.
Tenant credit checks and screening reports typically come from one of the three major credit bureaus: Experian, Equifax, or TransUnion. Another option is to use a private third-party tenant screening agency, which may provide a more in-depth report, such as background and criminal history checks. Like traditional credit checks, tenant credit checks and screening reports must comply with the Fair Credit Reporting Act . 1
How does a landlord obtain a tenant inspection report?
Once a tenant finds an apartment they would like to apply for, they contact the landlord – usually the landlord or a rental agency. If the landlord plans to run a tenant credit check or screening report, they must start the process, which may involve the following:
- Get tenant information. Landlords usually need your name, address, and Social Security number to conduct a check. Remember, landlords cannot access your credit report or tenant screening information without a “permitted purpose.” This usually requires asking the potential tenant for written permission, or proof that the report will be used only for housing purposes .
- Pay the fee for the report. The cost of the report (usually between $ 20 and $40) is typically passed on to the applicant, but some states require this fee. In some cases, landlords may allow tenants to submit their own copies of their credit reports.
- Run the report. Once the landlord receives a copy of the report, he or she will use it to decide whether to approve your application.
If you are unsure what to expect, you may want to consider consulting a local landlord-tenant attorney to learn about the laws in your state regarding tenant screening and credit checks.
What information does a rental inspection report include?
A tenant credit check is usually similar to a standard credit report, but the landlord may add additional screening processes. For example, a tenant screen usually contains information that is relevant to screening potential tenants rather than information that is relevant to someone looking for a home or car loan. Information may include:
- Personal Identification: Many reports will confirm your identity by verifying your Social Security number, address, and employment information.
- Credit score: The minimum credit score for renting an apartment is generally around 650. Some landlords, especially those in competitive housing markets, may require a higher credit score.
- Credit history: Landlords may check credit history to look at factors such as payment history and current debts to assess the likelihood that a tenant will pay rent on time. For example, negative signs such as a history of late payments, a high debt-to-income ratio, or delinquencies may indicate that a tenant is unreliable.
- Public records: These records may include records of previous evictions or bankruptcies, tax liens, and civil judgments. Landlords may view previous legal crises as a sign that a tenant will not pay rent on time or in full. Note that some states prohibit the use of eviction case information in making rental decisions .
- Background Checks: Background checks are often used to investigate a potential tenant’s history to ensure they are who they are and that they are a safe candidate. Background checks may reveal previous criminal records or other relevant warnings. Please note that the Fair Housing Act provides protections for tenants with criminal records. Individuals can contact the Department of Housing and Urban Development for more information .
If you anticipate any negative information to appear on a tenant’s credit check or inspection report, you may want to discuss these with the landlord before you formally apply. Providing background information ahead of time can set the context for what will appear on the report. Or, if the landlord has strict requirements, he or she may be able to tell you whether you’d be better off saving time and money by looking for another apartment with different requirements.
What you can do before applying for an apartment
Before filling out a rental application, check your credit report to make sure it is accurate. If you find errors, be sure to dispute them before applying, as they could negatively impact your chances of approval.
Additionally, the Consumer Financial Protection Bureau recommends asking potential landlords some questions about their rental inspection process.6 For example: What information will be included in their report? Will I have a chance to explain any red flags, or will a few negative flags result in a denial of my application? How much will the report cost, and who will pay for it?
Since many landlords require potential tenants to pay for these reports, it is best to avoid applying for more apartments than necessary as this will save you money. Additionally, some tenant credit checks may be hard credit inquiries, which may temporarily lower your credit score.
To improve your chances of approval, now might be a good time to do some financial work. For example, try to reduce credit card debt or past-due payments before you apply. If you have a low credit score, there may be other options worth discussing with a potential landlord. For example, finding a co-signer, paying a larger deposit, or showing a written record of financial responsibility if you have no credit history can help improve your chances of approval.
Tenant credit checks are a common part of the rental application process. Landlords will typically look at information such as credit score, credit history, public records, and income to help determine if an applicant is a responsible tenant. Before applying for an apartment, it’s a good idea to check your credit report and dispute any inaccurate information.
Ryan Lynch is a freelance writer, educator, and musician whose work focuses on finance, STEM, and the arts.
All Credit Intel content is written by independent authors and is commissioned and paid for by American Express.
