Questions for SR – Credit Reports

A credit check should be conducted before leasing to any and all prospective tenants. But once you have the report in hand, what should you be looking for? What’s a ‘warning flag’ and what’s ok? Here are some tips for dealing with a credit report:

  • Not all credit reports are the same. Make sure you look at reports from all 3 credit-reporting agencies: Experian, TransUnion and Equifax.
  • Double check that all information on the report is consistent with the information on the application. Inconsistencies can be a red flag.
  • Compare information from a report to information you receive from other sources, such as references and previous living situations.
  • The scores you see give the most weight to: a history of accounts going over 90 days late (vs. only one or two going late), current delinquencies, and multiple credit balances at or near maximum.

  • Most important to evaluate are the sections showing collection and credit account information. Look for patterns. For example, one account assigned to collections while all others are paid on time – this could signify one large expense (such as medical), does not necessarily reflect badly on the applicant. Also look for revolving charges matching the locations of clients previous addresses.
  • If there is a discrepancy that you would like to learn more about with a prospective tenant, a landlord is allowed to discuss the nature of the problem and give the tenant a chance to discuss or explain – however, a landlord may not give a copy of the report to a tenant.
  • There are companies that will evaluate a credit report for you, such as Beacon or Fair, Isaac – either by making a decision themselves as to whether a client is qualified, or by providing you with an easier to understand rating system.

Taking the time to read and interpret a credit report can provide you with valuable information on a prospective tenant and is an important part of the screening process. It greatly helps the ability to predict the likelihood of a tenant living up to rental and tenancy obligations.

If you ever have any questions, you can always ask us here at SeattleRentals on our Facebook Page, through Twitter or in the comment section below.

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