My husband and I independently rent a home in our neighborhood. Our question is how does an independent landlord run a credit report on prospective tenants?
Can you recommend good tenant screening services to run a credit report and criminal record check? Are there sites online for a reasonable fee?
One solution perhaps is to ask the tenant to pay for and to give us a copy of a credit record; however, we need to know reputable credit report agencies to refer them.
Answer: You are wise to run a credit check on prospective tenants because one of the best ways to determine whether you will get paid your rent on time is to examine the rental applicant's history of paying their personal bills on time.
There are several ways to get a credit report. I own a couple rental houses, and I when I want to check a rental applicant's credit I have an advantage because I also own a mortgage company, so I'm already set up with a credit agency account.
The credit agency we use is called Alliance 20/20, and they also offer a tenant screening service for private landlords, as well as professional property managers. Other credit reporting agencies offer similar services.
There are also many private tenant screening companies that you can find by doing a quick search on the Internet. I don't want to make a personal recommendation for any of the services because I haven't used any of them, but you could do some research on your own and see if you find one you like.
Another option is an organization I like called the Rental Housing Association of Puget Sound, which is a nonprofit organization that serves the needs of rental housing owners from single rental house owners to large apartment complexes.
They offer tenant screening services for their members through a third-party service. Here is their website: www.rha-ps.com.
Whichever service you choose, you should pay for the credit report yourself and have it delivered directly to you. Do not allow a rental applicant to give you a copy of their credit report because it may be fake.
Also, I advise you to get a full tenant screening report, not just a credit report. Most credit reporting agencies and tenant screening services will give you a choice of different levels of reporting.
For example, Alliance 20/20 offers three levels of tenant- screening reports: 1) credit report only; 2) credit report, Washington Statewide Criminal Search and a three-year eviction history; 3) credit report, Washington Statewide Criminal Search, three-year eviction history, two-year verified rental history and a two-year employment history.
Naturally, the third type of report would be the most expensive, but you are renting a very valuable asset to somebody you've probably never met, so it's wise to know as much about them as possible before you let them move into your rental house.
You may collect a rental application fee to cover the costs of the tenant screening service, but you may not make a profit on the fee. The application fee must the actual amount you are paying to the tenant screening service, no more.
You must also provide the rental applicants with the name and contact information for the credit reporting agency or tenant screening service that you used if they want to challenge information contained in a report that was used to reject their rental application.
Steve Tytler is a licensed real estate broker and owner of Best Mortgage. You can email him at firstname.lastname@example.org.
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