Landlord Credit Checks: What a Renter Needs to Know

By: Bobbi Dempsey

Evicting a tenant can be an expensive and time-consuming process that most landlords want to avoid. To identify tenants who might be more likely to fall behind on rent or cause other problems, increasing numbers of landlords are investing in credit checks and rental screenings as part of the rental application process.

Types of Reports

Services used by landlords, usually referred to as “credit reports,” can actually be very different.

There is the standard credit report that lists a person’s credit score, including collection actions or a negative payment history. Generally, the only items in this report that would specifically relate to renting would be evictions or court actions, or delinquent rent balances submitted to a collection agency. Most landlords (especially those that don’t own a lot of properties) don’t report rental history to the credit agencies.

Tenant screening reports, on the other hand, specifically focus on items that would be relevant to a landlord in evaluating potential tenants. Many landlords who don’t report information to credit bureaus will still submit information to tenant screening companies.

Looking to offer both kinds of services, Experian (one of the three major credit reporting agencies) a few years ago acquired RentBureau, a tenant screening firm. Experian now provides a report that includes rent payment history, unfulfilled lease terms, bad checks given to landlords and evictions. These reports contain both negative and positive items, whereas only positive rental information is included in Experian’s general credit reports, said a company spokeswoman, Maxine Sweet. Experian has also partnered with two firms that provide easy online rent-payment services for tenants, while they in turn report the tenant’s payment performance to the credit agency, Sweet said.

How a Rental Report Can Help or Hurt You

Prospective tenants may be apprehensive about credit checks or tenant screenings, especially if they have something in their rental histories that might be of concern for potential landlords. However, rental information—whether reported to a credit bureau or a tenant screening service—can be beneficial to some tenants. A person who has little or no credit history, for example, can build their credit score by maintaining a track record of on-time rent payments (assuming the landlord reports this information, which a tenant can request).

What You Can Do

If you are concerned about potential problems in your credit report, you can find out what information is in it. You are entitled to one free copy per year from each of the three credit bureaus. Look carefully at all of the information. Many credit reports contain errors. If you spot mistakes, you can dispute them via the credit agency’s website. For negative (but accurate) information, you can submit a statement explaining the circumstances, which will be added to your report.

Once you get a rental home or apartment, maintain a good payment pattern and ask your landlord to report this information to help your credit. On the other hand, If you know you will have a problem making the rent on time in the near future, you can opt-out of this reporting until you’ve passed that point and gotten back on track.