5 Things Landlords Look For On Credit Checks
Credit checks are a major tell-all for landlords. They tell so much about a person's financial behavior, responsibility, and financial status. The landlord is basically looking for red flags listed in reports of your data. Sometimes if a landlord chooses to rent to someone with a bad credit score, he is legally allowed to increase the security deposit. So just how does a landlord perform a credit check? There are a few different way for landlords to screen their tenants. They can do this through tenant screening services, credit bureaus or different landlords associations. Let's dive into what a landlord may be looking for in your report.
A Good Credit Score
Whether or not you have a good credit score is the first thing a landlord will check for. In general a score above 670 shows that you have a pretty good standing(Buckeye Northwest Realty will work with 600 or better). It is to be noted that this number can vary depending on where you live, your monthly income and rent. So using apps such a Credit Karma can help you get a better understanding of your score and the things you may need to do to improve it before you credit check.
Late Payments
Every landlord wants a tenant who pays their rent on time, and credit checks can provide them a way to figure out who those people are. These checks will show if you're consistently paying payments on time annually. The best part of a credit check is to show whether you have a consistent pattern of paying your rent late. Late payments on credit cards, utility bills, car instalments or loans can impact your credit score and would impact your probabilities of getting approved. A credit report can also show if any previous landlords have reported money still being owed.
Credit History
It's important to understand whether someone is having a difficult time paying their bills at the moment or if it is a regular thing. A typical credit report will cover 10 years. The information such as bank accounts, credit accounts, loans, credit balance as well as other crucial information will be covered. This information lets the landlord know a few different things, for example whether you can afford rent. It also shows how long you have been at your job which can hint at your financial stability.
Credit Usage
A credit check would show how much debt you have overall. This means any money you've taken out for cars or education will be seen. This lets the landlord know that you won't be spending more than half your income on bills and rent. Tenants with higher debts may have difficulty with their ability to pay rent each month.
It is also good to note which kind of debt is responsible and which can be seen as reckless. For example having a student loan would be responsible versus shelling out huge sums of money on an expensive car could be considered irresponsible.
Other Relevant History
Factors that could also rule your application out are bankruptcies, evictions, criminal charges and other issues would be listed here.
While landlords don't expect you to have a perfect credit record, having a low score and other problematic factors would affect whether you get approved for your rental or not. It is always important to have a look at your own credit score so in the case that you are asked about specific parts you will be able to back up your information and score.
