If you are a landlord in Missouri, one of your biggest and ongoing headaches is finding good tenants. The kind that pays rent on time, who keep the premises clean and notify you right away if there are any plumbing or HVAC problems. One of the best tools you can use to find these kinds of “dream” tenants is tenant screening. One of the most valuable pieces of a screening and one that should not be neglected is a credit check.
The American Apartment Owners Association has some tips on what to look for on a credit check that can help you sort out applicants and decide on your next renter. Do not be put off by the format of a report, which may seem confusing.
Check first the potential tenant’s payment history. Look for how often payments are late, the most recent late bill and how long it took for payments to be made. Anyone can forget to mail a payment or two, but if there are more late payments than on-time, it may indicate when you can expect rent payments. If most of the late payments occurred during a certain period of time that is more than two years old, the renter may have experienced an illness or job loss that caused financial struggles. It happens. You should look primarily at payments in the last 24 months.
Does the renter have large debts? Check the applicant’s income against his debt to see if there is enough money left over to easily cover rent payments. If not, you should probably look at other applicants.
A credit report will also show you if the renter has bankruptcies, judgments or collections against him or her. A small medical collection is all-too-common nowadays and is not likely a problem. If there are many judgments or accounts in collection, it may point to someone who does not manage money well.
Think like the manager of a retail store and match the address, full name and social security number from the report to your applicant. If something does not match, you may be dealing with an identity thief, which is a common problem nowadays.
Along with a search for criminal records and verifying an applicant’s employment, credit is an important check of potential renters. The three together can help give you a clear picture of someone’s background and potential as a responsible renter.
This information is not intended to replace the advice of an attorney.