how to run tenant's credit score?
Rental Property Investor · Philadelphia, PA · Member since 2020 · 83 posts · 23 votes
Hi, what's the best site to get a tenant's credit score? and is it free?
Also, is it important to check criminal history? if yes, what's the site to do so?
Thank you!
@Vinh Nguyen several good suggestions where offered. Be aware that there are many rental property manager websites you can use for screening. They all use one of the major credit agencies. No matter which credit agency they use, it should return similar information. The three credit bureaus are TransUnion, Experian and Equifax
Hard pull versus soft pull:
A hard pull is when you pull credit on someone. This is when you are providing the persons name, social security number and payment to a credit screening agency. The hard pull shows up on their credit report. A hard pull has a negative effect on their credit score. A soft pull is when the tenant requests their own credit report. They provide their information to the credit agency and they pay. They agree to SHARE it with you. The screening service provides a copy directly to you AFTER the tenant has seen it themselves. The other advantage of a soft pull is it removes you from certain data handling and credit screening laws. If you do a hard pull and reject someone based on that pull, you are required to provide a letter explaining why they were rejected. If you do a soft pull, the applicant knows exactly what you see. Most every service uses soft pull, so as long as you are not typing in the applicants social security number or paying, it should be soft pull. Avoid hard pull.
Here is a summary of services mentioned in this thread:
Smartmove is tenant screening provided directly by a credit reporting company, TransUnion. One advantage of using their service is that TransUnion is a well know and trusted company. This is a soft pull service.
Cozy is an application, credit screening and rent collection service. Be aware that Cozy is no longer accepting new customers. They were acquired by CoStar Group and they are redirecting customers to Apartments.com. The advantage of Apartments.com is they also offer a listing service to advertise properties with a decent amount traffic. Apartments.com uses TransUnion for soft pull credit reports, so you will get the identical report you would get through Smartmove. Cozy uses Experian for credit reporting, so existing users setup on Cozy are getting Experian credit reports. There is not much difference between TransUnion and Experian credit reports. Bottom line is you cannot sign up with Cozy, so it will be Apartments.com. In addition to listing your property on Apartments.com, you can also accept applications and collect rent. Just a note for people already using Cozy, they will be moving all their accounts over to Apartments.com this year some time. I was told this directly by Apartments.com.
RentPrep is an application, credit screening and rent collection service. They also use TransUnion for soft pulls.
Rentspree is an application and credit screening service. They also use TransUnion for soft pulls. I don't think they offer rent collection.
Myrental is just for application and credit screening services. They don't disclose who they run credit through, other than saying one of the big three.
Zillow is a listing service, application services, credit screening and rent collection service. Zillow is comparable to Apartments.com (Cozy). Zillow soft pulls their credit reports through Experian similar to Cozy.
Summary:
I personally use Cozy, which gives me Experian credit reports. I have been happy with the information provided. As I mentioned, Cozy is pushing people over to Apartments.com, so I will end up there in the next year. I like using Cozy because tenants sign up one time and use the same account for rent collection. If you use Smartmove, you still need to set the tenant up someplace else if you are collecting rent online (you want to collect rent online). You may notice I added Zillow as an option in the services I summarized. They are newer to the screening and rent collection business, but Zillow is the number one place for listing rental properties.
If I was shopping services today, I would compare Apartments.com and Zillow. They are the only places where you can list a property (and actually generate viewing traffic), accept applications, do credit and background screening and collect rent. The actual credit reports are not going to be much different. You are going to get a TransUnion or Experian report most likely whomever you use. I like the one-stop shop benefit, because managing less services is a time saver.
@Jon Q. AGAIN, you are making comments with zero knowledge just google . Sure these are blue collar BUT IN KNOW MEANS rough areas. You really are very arrogant making comments with zero knowledge. I do not know any other city in america, that has so many from overseas investing in it . Heck I flipped about 250 props to Israel investors , and I am just one person, they have bought 1ks and 1ks . I am not here to "sell " you anything, just correcting your remarks. Not the life style, hmm, again you really need to talk with people that have 10, 20 doors that paid 40- 70% less then todays pricing and see their life style
VERY difficult to get the 1.5 - 2% rule 10- 15% NET caps in the upper middle class,,,,,,
All the best
First, you won’t attract high quality tenants in very low rent areas.
Second, yes, not the lifestyle. What you invest in, if you do it full time, becomes your life. While you may be able to generate a decent return in rougher areas, an increased amount of your time will be spent in those areas, managing your “property manager” who’s managing your properties in those areas etc... so yes, choose your investment wisely. If you’re successful at it, It becomes your life. Choose wisely.
Third, I don't follow subscribed made up rules, but I can tell you that I've bought plenty of 4/2s in Austin, Dallas, and many other markets for less than $100k. They meet and far exceed your "rule". I use an investment analysis that spits out a COC and IRR before I invest a dime... and have been generating 20-40% returns on all investments since 2002 So you're not correct. To negotiate a good deal and maximize your return, you must learn to add value and look for deals where you're able to do so.
Finally, if you build a model by buying the right property, in the right location, where you can attract the right tenant, managing your own property is not difficult. Someone with “little knowledge” or experience should avoid making blanket statements and shouldn’t assume it can’t be done if they’ve never learned how to do it.
@Jon Q. my god, enough ! I am happy you are doing well as am I in my market. All my personals are 25% NET +++ flips 50% in under 30 days . My only regret is not keeping 50 more of the 500 or so I flipped from 5, 6 years ago. Not only have those prices doubled or more, the net caps were 40% ++ This is not a contest... I live on the beach, own the PM co, and have rentals, little to know headaches, all is good as I hope they are with you as well,
All the best
BTW I WISH I had bought in Austin , my god it has boomed , I was there last month,
@Jon Q. my god, enough ! I am happy you are doing well as am I in my market. All my personals are 25% NET +++ flips 50% in under 30 days . My only regret is not keeping 50 more of the 500 or so I flipped from 5, 6 years ago. Not only have those prices doubled or more, the net caps were 40% ++ This is not a contest... I live on the beach, own the PM co, and have rentals, little to know headaches, all is good as I hope they are with you as well,
All the best
BTW I WISH I had bought in Austin , my god it has boomed , I was there last month,
“Flipping” is not investing. Investing is “being invested, aka owning real estate over time. I do bet you regret not selling. People don’t grow long term wealth through transactions. They build long term wealth by being invested for long periods of time. If you do your homework right and things don’t head south, selling and paying taxes rarely makes sense.
Austin had the right ingredients in place for a long time, even prior to 2004 when I began buying there.
@Jon Q. PLEASE stop "pitching me " I am fully aware of how to invest. But when I can ( 4, 5 years ago I had unlimited buying ) make 30- 40% in a week vs rental income well.... However I own rentals as well ., plus flip
Good Luck
I use apartments.com. It is very easy - you just setup your property on there which takes no time at all, then you send a link through apartments.com for people to apply. The process will be entirely captured on apartments.com and they'll take care of the application fee and everything. They will let you know when the application is done and you can review credit history and background history in a nice summarized format that will let you know if there are any red flags. I also love apartments.com because once you have approved applicants you can answer a series of questions about the property and the lease, and then it will generate a lease based on your responses/preferences. Oh by the way - it's totally free!
disclaimer: even though it sounds like one, this is not an ad for apartments.com lol. I used it for my first rental property and it made everything way easier than I ever expected. Feel free to reach out to me with any other questions!
How about doing it yourself? Other than the criminal background check, the rest you should be able to do by:
1) employment history (so you can contact their manager, etc.)
2) employment paycheck (last 3 months), etc.
3) bank / checking / savings account statement of last year (to validate employment check deposits and history, etc.) and tenant's net worth
4) previous property manager / landlord (the last 2 or so) so you can contact and verify if tenant was responsible and owes any money or not
Basically, it's like a job interview or refinancing of your home, I'm I correct on this?
How about doing it yourself? Other than the criminal background check, the rest you should be able to do by:
1) employment history (so you can contact their manager, etc.)
2) employment paycheck (last 3 months), etc.
3) bank / checking / savings account statement of last year (to validate employment check deposits and history, etc.) and tenant's net worth
4) previous property manager / landlord (the last 2 or so) so you can contact and verify if tenant was responsible and owes any money or not
Basically, it's like a job interview or refinancing of your home, I'm I correct on this?
Absolutely right. You should do it yourself or have someone you really trust do it. Because it’s the single most important thing with regard to your investing. The cost of doing it wrong is much too high.
How about doing it yourself? Other than the criminal background check, the rest you should be able to do by:
1) employment history (so you can contact their manager, etc.)
2) employment paycheck (last 3 months), etc.
3) bank / checking / savings account statement of last year (to validate employment check deposits and history, etc.) and tenant's net worth
4) previous property manager / landlord (the last 2 or so) so you can contact and verify if tenant was responsible and owes any money or not
Basically, it's like a job interview or refinancing of your home, I'm I correct on this?
I think this is absolutely one way to do it, but I'll be devil's advocate just for the sake of discussion and provide two main reasons why I choose not to do it this way.
1. This is HARD. Tracking down all of these documents takes a lot of time, effort and communication, and then once you have the documents, you actually have to read them, interpret them, and figure out how they apply to your situation and your applicant's situation. When there are already tools that do this for you, to me it's a lot more efficient to let those tools go to work for me.
2. If you do it this way it's going to take a lot of time, and that can be a detriment to you and your business. If you're taking a few days to track down and call work bosses, get check stubs, get bank statements, get brokerage statements etc. that causes a lot of ripple effects: your applicant gets antsy, your applicant won't love that some random landlord is getting all of this sensitive info (everyone would rather send those things to an established company), in the meantime you might have other applicants and now you're not sure how to handle that, you end up losing an applicant because they had to send sensitive info to someone they don't know and they went multiple days without hearing back.
I appreciate the grind of doing it oneself, but in my opinion there are great resources to use that mitigate a lot of the aforementioned risk.