How to Run a Credit Check on a Tenant: A Landlord’s Complete Guide

As a landlord, choosing the right tenant is crucial to protecting your property and ensuring consistent rental income. One of the most reliable ways to assess a tenant’s financial responsibility is by conducting a credit check. A credit check provides insights into the tenant’s payment history, outstanding debts, and overall creditworthiness, helping you make informed decisions.

In this guide, we’ll walk you through how to run a credit check on a tenant, including the legal considerations, tools to use, and how to interpret the results effectively.

Why Run a Credit Check on a Tenant?

A tenant credit check is a critical part of the tenant screening process. It helps landlords:

Evaluate Financial Responsibility

Credit checks reveal whether a tenant has a history of paying bills, loans, and rent on time, helping you assess their reliability.

Reduce Rental Risks

By identifying tenants with poor credit scores or a history of defaults, landlords can minimize the risk of missed payments or eviction proceedings.

Protect Your Investment

A financially responsible tenant is more likely to maintain the property and meet lease obligations, safeguarding your investment.

Comply with Best Practices

Running a credit check shows due diligence in tenant selection, which can protect you from potential legal disputes.

Step-by-Step Guide: How to Run a Credit Check on a Tenant

Obtain the Tenant’s Consent

Before running a credit check, you must secure the tenant’s written permission. This step is required under the Fair Credit Reporting Act (FCRA) in the U.S.

Include a credit check clause in the rental application.
Use a consent form specifying what information you’ll access and how it will be used.

Example Text for Consent Form:
“I authorize [Landlord’s Name] to perform a credit check as part of the tenant screening process. I understand this may include accessing my credit report, financial history, and public records.”

Gather Necessary Tenant Information

To run a credit check, you’ll need:

Full name
Current address
Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN)
Date of birth

Ensure the information is accurate and complete to avoid delays or errors in the screening process.

Choose a Tenant Screening Service

There are several platforms available to landlords for running tenant credit checks. Popular options include:

Service	Features	Price
TransUnion SmartMove	Comprehensive reports, including credit history and eviction records.	$25–$42 per report.
Experian Connect	Allows tenants to share credit reports directly with landlords.	$14.95 per report.
Equifax Tenant Screening	Detailed credit reports and rental background checks.	Pricing varies by plan.
MyRental	Includes credit reports, criminal records, and eviction history.	$24.99–$39.99 per report.

Run the Credit Check

Using the chosen platform, submit the tenant’s information to generate the credit report. Depending on the service, you’ll receive data such as:

Credit score
Payment history (e.g., late payments, defaults)
Total debt and debt-to-income ratio
Bankruptcies, foreclosures, or collections

Analyze the Credit Report

Once you receive the report, assess the tenant’s financial reliability based on these key factors:

Factor	What to Look For
Credit Score	A score of 620 or higher is typically considered reliable.
Payment History	Consistent on-time payments suggest financial responsibility.
Debt-to-Income Ratio	Lower ratios (30% or below) indicate better financial stability.
Negative Marks	Bankruptcies, foreclosures, or unpaid debts may be red flags.

Pro Tip: Don’t base your decision solely on the credit score. Consider the full financial picture, including income and references.

Verify Supporting Information

Cross-check the credit report with other details provided by the tenant, such as:

Proof of income (pay stubs, tax returns)
Employment verification
Rental history or references from previous landlords

This step ensures accuracy and provides a well-rounded view of the tenant’s reliability.

Make an Informed Decision

Use the credit report, along with other screening criteria (e.g., criminal background checks, rental history), to make your final decision.

Approve tenants who demonstrate financial responsibility and stability.
Politely decline applicants who pose a high risk, ensuring you comply with anti-discrimination laws like the Fair Housing Act.

Legal Considerations for Tenant Credit Checks

When running a credit check on a tenant, it’s essential to comply with legal requirements to protect both parties.

Follow the Fair Credit Reporting Act (FCRA)

Obtain written consent before running a credit check.
Notify the tenant if you deny their application based on the credit report, providing an Adverse Action Notice that explains the reason.
Include the name and contact information of the credit reporting agency.

Comply with Fair Housing Laws

Avoid discrimination based on race, religion, gender, disability, or other protected classes. Use consistent criteria for all applicants.

Keep Tenant Data Secure

Protect sensitive information like Social Security Numbers by storing documents securely and using encrypted platforms for data transmission.

Benefits of Running a Credit Check on Tenants

Benefit	Description
Reduced Risk	Identifies potential tenants with poor financial habits or high debt levels.
Peace of Mind	Ensures you choose a tenant who can meet rental obligations consistently.
Faster Tenant Screening	Streamlines the process of evaluating tenants objectively.
Improved Property Management	Reliable tenants lead to fewer late payments, evictions, and property issues.

Conclusion

Running a credit check on a tenant is an essential step in the rental screening process. It gives landlords valuable insights into a tenant’s financial responsibility, reducing risks and ensuring reliable rental income. By following the steps outlined in this guide—securing consent, choosing the right tools, and complying with legal requirements—you can confidently select the best tenants for your property.

Ready to protect your investment? Start running tenant credit checks today to find reliable renters for your property!