How
to Run a Credit Check on a Prospective Tenant
Tenant screening
is a process used primarily by residential
landlords
and property managers to evaluate prospective
tenants. The purpose is to assess the likelihood the tenant will fulfill the
terms of the lease or rental agreement and
tenant credit checks are an important part of this evaluation process.
Credit
reports are a type of consumer report as defined and by the federal Fair Credit
Reporting Act (FCRA). The purchase and delivery of credit reports is tightly
regulated because of the sensitive nature of the information, as well as privacy
and identity theft concerns.
If you want
to run a credit check on a prospective tenants you have a couple of options.
One is to enter into an agreement with Consumer Reporting Agency - generally one
specializing in
tenant screening (a
tenant screening company). These
specialized consumer reporting agencies offer additional important services such
as criminal and eviction records searches.
Federal law
limits the use of consumer reports (including credit reports) to specific
“permissible”
purposes. Tenant screening is one such
permissible purpose. The consumer reporting agency or
tenant screening company will require you, the
landlord, to certify your purpose and agree to specific terms and conditions by
signing a tenant screening agreement. The FCRA further requires the screening
company to confirm your identity, confirm your permissible purpose and that you
will properly safeguard the information once in your possession. This process
typically involves a site inspection and an audit of your systems and processes
conducted by a 3rd party familiar with the requirements of the consumer
reporting agency.
The
certification process is a bit intrusive, time consuming and expensive. While
it makes sense for rental housing professionals, it is generally not practical
for private landlords or those with fewer than 50 rental units.
An
alternative - and much simpler -
process
for private landlords is direct-to-consumer
tenant
screening reports initiated by the applicant. Direct-to-consumer screening
reports are ordered and paid for by the applicant who then shares their report
with you. Since the applicant orders the report on themselves, there is no need
for you to sign up with a screening company or go through the certification
process. Some companies that offer these
applicant initiated reports often offer the additional services the
tenant screening companies offer. This model offers
numerous additional benefits to both landlords and applicants.
Visit
Moco Incorporated for information
regarding the traditional (landlord initiated) tenant screening model. For more
information regarding consumer initiated tenant screening reports, visit
MyScreeningReport.com®.
MyScreeningReport.com®
is a product of
Moco Incorporated.