Tenant Credit Reports
A tenant credit report is perhaps the single most important tool available to
landlords and should always be run before entering into a lease agreement. It
contains valuable pedigree information (name, social security number, and
addresses); liens, judgments, and bankruptcy history information; credit
accounts (including balances, limits, when opened and closed, and amounts past
due); and inquiries from entities considering extending credit to the subject.
Aside from determining whether a prospective tenant is responsible, has met his
or her financial obligations, or is over-extended (and may therefore wind up in
arrears), the tenant credit report provides information useful in conducting the
rest of a background investigation. Compare the pedigree information with that
found in the completed rental application. Does it match? If, for example, an
applicant's name or date of birth are not the same, that is a red-flag requiring
further inquiry.
Similarly, if an address appears in the credit report but was omitted from the
rental application, the prospective tenant may be hiding something. Could it be
a bad experience with a prior landlord or a criminal conviction? Dig deeper.
This pedigree information, when run alone, is what is known to police and
private investigators as a credit header. It is usually up to date and accurate.
As a result, credit headers are used to locate wanted persons, witnesses, and
establish affiliations. The inquiries section of a tenant credit report is also
useful. Who ran a report recently? Another landlord? If so, was the rental
applicant simply property shopping, or does that landlord know something you
don't? Also, inquiries, when considered in light of open credit accounts,
current employment, and the applicant's salary, will tell you whether the
prospective tenant is living beyond his or her means, or has an undisclosed
source of income, possibly from an illicit trade. Finally, a money judgment in a
tenant credit report may have begun as a restitution order in criminal court,
thereby revealing a conviction.