Question: I read your column in The Herald on May 20 titled “Screen tenant’s credit, criminal history before renting” and need some clarification on two issues mentioned.
My wife and I own eight rental properties in the south Snohomish County area that we manage and maintain ourselves. In your article you said that one of the best ways to find out if you will get the rent paid on time is to review the potential applicants’ credit reports.
The large landlord association we belong to suggests that the credit report is not that good or necessary in predicting tenants. They recommend their associates look mainly at employment, criminal, evictions, judgments, civil records and previous tenancy.
Issue two: The tenant screening company we use will no longer give us copies of the applicant’s credit report. Their recommendation if the applicant gets denied by them because of credit-history issues is to have the applicant come back with a copy of their credit report so they can discuss it with us.
Your article said do not allow a rental applicant to give you a copy of their credit report because it may be fake.
Can you give us your thoughts on these two conflicting opinions?
Answer: While it may be somewhat confusing, the opinions you received from the two agencies are not conflicting and in fact agree with what I wrote in my column a couple of weeks ago.
First of all, I agree with the landlord association that a credit report by itself is not the best way to tell if a tenant will pay their rent on time. I have occasionally rented to people who had less than perfect credit if they had a reasonable explanation for the past blemishes on their credit history and have been paying their bills on the time over the past 12 months.
Many people put a priority on paying their rent on time, even if they are not as diligent about paying their credit cards and other bills on time. So that’s why landlord references are very valuable.
In addition to credit and landlord history, it’s a good idea to know if prospective renters have ever been evicted from a rental property or if they have a criminal history.
I mentioned in my previous article that I can easily pull credit reports on my prospective tenants because I own a mortgage company, so I have a contract with a credit reporting agency. Most people don’t have access to that kind of service directly, but you can get tenant screening services from most of the credit reporting agencies that include everything you need to know to make a renting decision.
For example, the credit reporting agency that my company uses (Alliance 2020) provides a tenant screening package that includes nationwide and local criminal records search, sex offender search, eviction history, current landlord and employer verification, rent-to-income analysis, and “credit criteria decision indicator” for only $49.95. Many other companies offer similar services.
I recommend using tenant screening services, but I like to do the landlord and employment verifications myself, if possible, to make sure the information is accurate. The reason I said you should not accept a copy of a credit report from a rental applicant is because you have no way to know if the report is genuine and was prepared by a third-party provider with no relationship to the applicant.
If a rental applicant wants to challenge the accuracy of any derogatory items on the tenant screening report you have obtained, you are required by law to give them the name, address and phone number of the credit reporting agency and/or screening service that you used.
However, you are not required to provide them with copies of the information you obtained from the service.
I hope this clears up any confusion you may have had about using credit reports and tenant screening services.
Steve Tytler is a licensed real estate broker and owner of Best Mortgage. You can email him at email@example.com.