How do I run a credit check?

Question

I have some applicants for a rental property coming out on Thursday, how do I run a credit report on them?  What am I looking for on the credit report?  Any advice is appreciated.

Sean

Steve Babiak · Answer

Yes, Bill Gulley is hitting that nail right on the head; computer software these days can alter the document so well that you would have a hard time distinguishing a falsification.  I've had a number of potential applicants all say they can bring a copy, but when I say that I don't accept any reports except those coming from my service - well they never follow through with completing the application.  Keeps those scammers away ...

Bill Gulley · Answer

John, gotta say that's not a good idea, allowing any applicant to bring you a credit report. I see you are a hard money lender, hope you don't do that in lending.

Joe can get Bob to run a report, copy it, edit the ame and SSN, hit print and Joe has a good credit report!

I'll mention too, that an applicant should never have access to a credit report or to any verification. You don't hand a past landlord verification to the applicant to have them go get your verification filled out!  :)

Brandon Turner · Answer

Hey Sean Price - I'd recommend SmartMove, as some above me have said. If you use the BP link here you get $5 off and it helps us out! :)

Also- definitely check out my Ultimate Guide to Tenant Screening

Steve Babiak · Answer

Depending on what you are looking for on the "credit check", I doubt you'll be "qualified" in time to be the recipient of full reports by tomorrow.  You might get the "condensed" reports, but I don't put much value in those, at least as far as tenant selection; you see, most tenant applicants these days have terrible credit, so I suspect the condensed reports will tend to come back bad ... I could be wrong since I don't use those ...

Steve Babiak · Answer

Here is an earlier post from me that will show why what Mike H. just posted is important:

http://www.biggerpockets.com/forums/52/topics/76648-how-big-deposit-bad-credit-and-poor-income?page=1#p451754

Mike H. · Answer

Two things.

1) You really want to do more than a credit check. To me,  you need all 3 (credit, criminal and evictions). The biggest thing I want to catch is the evictions. People who have been renting for 10 years with bad credit and don't have any evictions are better than people who have been renting for 10 years that have decent credit but have 1 eviction.
At least thats what I've found. But criminal is important as well.

2) There are services out there that do all 3. But some require that they do a home visit and for you to have locked cabinets, etc.
But thats only if you want to get the actual credit report (i.e. accounts and scores).

I use Screeningworks. They let me pull all 3 for 30 bucks and I don't have to go through the home screening and setup. The only drawback is for the credit, I basically get a good, average or do not rent to them for a view of their credit.

But, more importantly, I get their criminal, eviction AND their past residences.  This also has some values to me. I once caught someone pulling a fast one on their addresses by using their relative. Come to find out, when I pulled their report, not only did they have 2 previous evictions but they had lived all over the place over the last few years.

George Paiva · Answer

I use these guys - http://www.thelpa.com/lpa/QuickCheck.html

Sean Price · Answer

Thank you everyone. This has been very helpful.

Roy N. · Answer

@Sean Price

One of the agencies we use is:

http://www.tenantverification.com/

They provide services for both the U.S.A. and Canada.

Our other provider is in the Canadian market only.

James Vermillion · Answer

Isn't that the truth!  But if everyone were honest you wouldn't even need any kind of documentation, you could just ask them about their credit and take their word for it.  Unfortunately we live in a world full of dishonest people, so we all have go out of our way to protect ourselves and our property.

For the record I use mysmartmove and have had a good experience with my first two rental properties.

How do I run a credit check?

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