What Shows Up on a Tenant Credit Check?

Are you looking for a place to rent? If so, you’re not alone. Around 36% of American households rent apartments or homes, which means over one-third of people rent versus own.

As the demand for rental properties increases, landlords use more screening procedures to choose their tenants. One screening you can expect is a tenant credit check.

You might want to learn about the information on a tenant credit check before applying for a rental property. After all, if you know what the landlord will see, you can prepare an explanation if your credit isn’t perfect.

Here are the details you can expect a landlord to see if they run a credit check on you.

Things Landlords See on a Tenant Credit Check

A typical tenant credit check contains many vital details that landlords evaluate and examine. Here are some of the main things:

Basic Information

A landlord will first see basic information on a tenant’s credit check. Basic information includes the general details about who you are.

It tells the landlord your legal name, address, and social security number. A landlord verifies your identity by comparing these details to the information you provide on your application.

Landlords can also see your previous addresses on a tenant credit check. By reviewing these, a landlord might assess your moving habits.

Open Accounts and Balances

A tenant screening also includes information about your open credit accounts. If you’ve ever looked at your full credit report, you might understand what this looks like.

A credit report shows every open account a person has. In many cases, they also list closed accounts. However, closed accounts fall off a report after several years.

Additionally, your landlord can see your account balances. Landlords review this information to see where you stand financially.

It might be a red flag if they see that you have high balances on all your accounts. But on the other hand, seeing low balances is a positive trait that reveals that people manage their money well.

Owing a lot of money to many creditors illustrates that you might have too many obligations. For example, you might have trouble paying your rent when you have too many financial obligations.

Derogatory Information

When landlords screen potential tenants, they also look closely at the derogatory information on the reports. Most credit checks include a section labeled “Public Records.”

A public record is a derogatory item that decreases your credit score. For example, if you filed for bankruptcy in recent years, your bankruptcy posting will appear as a public record on your credit report.

You can have other public records, too, including court judgments and foreclosures.

These derogatory items demonstrate financial problems, and landlords consider these red flags.

Payment History

Credit reports also show a person’s payment history. A person’s payment history reveals a lot to a landlord.

When a landlord sees that a person has a 100% on-time history of paying bills, they can feel confident about renting to that person.

On the other hand, landlords might be suspicious of renting to a person with a poor record of paying their bills on time.

Landlords will see this information when they run a tenant credit check. Therefore, you can expect the landlord to review these details before responding to your application.

Employment Information

A tenant credit check also reveals information about a person’s employment. However, this information is not always up-to-date.

Landlords might review this information to see how many previous employers a person had. They might also study the details to learn more about a person’s job habits.

Landlords prefer to rent units to people with steady job histories. One detail that reveals a stable job history is employment length. If a person stays at the same job for at least one or two years, it shows a positive job pattern.

Credit Score

Finally, landlords can see a person’s credit score when reviewing tenant screenings.

Landlords might develop standards that apply to applications. For example, one landlord might require a score of at least 650. On the other hand, another landlord might require a score of 700.

Landlords might also run background checks, as these show different details about a person’s life. For example, running a criminal background check reveals a person’s criminal record, whereas a credit screening won’t.

What a Tenant Credit Check Doesn’t Show

There is one thing that most credit checks don’t show, which is a person’s rental history. The landlord won’t be able to see your previous landlords on the report. However, they can see your previous addresses.

If you have a positive rental history with a landlord, you can ask the landlord for a letter that describes the details. For example, it could state the dates you rented from them and your payment history details.

Reasons Landlords Run Them

Now that you can see what information landlords view when running tenant credit checks, you might wonder why they run them. Here are three of the top reasons most landlords use tenant credit checks before approving units:

To Avoid Renting to the Wrong Person

Running a credit check for landlords helps them avoid renting apartments to the wrong people.

When someone applies for an apartment rental, the landlord might not know anything about the person. In other words, it’s a complete stranger. The landlord must protect their property, though, so they run credit checks.

As they evaluate the information found on the credit reports, they can learn a lot about the person. Thus, they can avoid renting to people who don’t meet their required standards.

To Choose the Best Candidates

Secondly, running credit checks helps landlords rent to the right people. Imagine if a landlord has one unit to rent but receives ten applications.

Without researching each person, the landlord would have no idea who to pick. However, landlords don’t like choosing tenants without proper screenings, as this could pose risks, challenges, and problems.

In this example, the landlord could run credit checks on each person and pick the cream of the crop. They could choose the person with the best credit, as credit reveals a person’s ability to pay their bills on time.

For Protection

Through proper credit checks and background screenings, landlords can protect themselves and their investments. People with good credit and clean criminal histories will care for their units and pay their rent on time.

The result is that tenant screenings protect the landlords, so they run these screenings. Another thing to note is that renting to the right tenants reduces a landlord’s workload with rentals.

How You Can Prepare

So, what is the point of learning this information if you want to rent an apartment? The main point is to help you understand what landlords look for when processing rental applications.

Work on Your Credit

If you know what a landlord looks for, you can work on improving your financial position to increase your chances of getting approved. After all, if you need to rent an apartment, you’ll have to pass the screenings.

One of the best things you can do is work on your credit. You can use various techniques to increase your credit score. However, building or repairing credit doesn’t happen instantly. It takes time.

It’s never too late to start working on your credit score. If you start now, you’ll have better credit faster.

What to Do if You Have Bad Credit

If you currently have bad credit and are afraid you won’t find an apartment, you can talk to some landlords to explain your situation.

To increase your odds of getting approved, you could offer more money upfront. You could also offer to pay a higher monthly rate for your unit.

You might also want to explain why you have bad credit if you have a good reason. For example, maybe you had a bad car accident that left you unable to work for a while.

If you can explain your situation to a landlord, it might improve your chances of getting the apartment.

Expect a Credit Check When Renting a Place to Live

If you’re in the market for a rental home or apartment, you can expect the landlord to run a tenant credit check. They will need your consent to run it, so you must agree to it before they run it.

When the demand for rental properties increases, you might face challenges getting approved for an apartment if you don’t have stellar credit. Therefore, you might want to work on your credit before applying.

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