Have applicants/renters run their own credit reports?

Question

Hey, I'd like to get both landlords' and renters' thoughts on this. During the application process, I believe it is beneficial for both the landlord and the renter to have the renter be the one that runs his/her own report.

Any points you agree with? disagree?

Benefits for Landlords

• No need to collect SSNs

A SSN is required to pull a credit report. By having the renter run his own report, this is no longer necessary.

• No need to ensure appropriate safeguarding of SSN

Another benefit of not collecting a SSN is the landlord doesn’t have to worry about adhering to all of the varying and confusing state laws around protection of personal identifiable information (PII). The SSN will not appear on the credit report itself.

• No need to use a third party credit reporting service

For most landlords, running a credit report is usually the only thing in the application process that they can’t do themselves. They are forced to use a third party which is expensive and time-consuming.

• No need to argue over who pays

There is a cost to running credit reports and often landlords would collect a fee from applicants. Sometimes landlords absorb the cost themselves. By having renters run and pay for their own reports, there is no awkward discussions or negotiations on who should pay. We’ll explain how this actually saves money for the renter later on in this article.

• No need to send the credit reports to applicants

If a landlord rejects an application based on the renter’s credit score, the renter has the right to see the report. Many renters will ask for the report anyway. It is time consuming to deal with mailing, faxing, and/or emailing to satisfy these requests, especially if there are 10 or 20 applications per listing.

Benefits for Renters

• No need to share SSN with strangers

Most renters don’t personally know the landlords of rental listings they are applying to. Why trust strangers with your most private information?

• No need to worry about hits to your credit score

When a renter pulls his/her own report, it is considered a “soft” inquiry which does not impact the renter’s credit score. This is the same as checking your own credit.

However, if a renter lets the landlord run the report, this will often register as a “hard” inquiry which decreases the renter’s credit score. The most common example is when the landlord sends the renter’s application information to a third party screening company who then pulls the credit data. This is considered a hard inquiry because the renter had no direct involvement in the request.

Many renters apply to multiple rental listings with different landlords. Multiple hard inquiries in a short time frame can significantly damage a credit score.

• No need to worry about others making mistakes

Not all landlords know the correct procedure for pulling credit reports. There have been reports of landlords mistakenly requesting multiple inquiries on one renter. Again, this can severely decrease the renter’s credit score. Why take the risk?

• No need to pay for the same credit report multiple times

Since many renters apply to multiple rental listings with different landlords, they often have to pay for the credit report again and again on each application. This can be very costly.

Sure, a renter could apply to one place first and after the landlord runs the report, request a copy of it. However, while waiting for the report (which the renter has no control over), the other apartments may be scooped up already.

A renter who runs his own report can pay once and immediately include it in as many applications as needed.

• No need to be in the dark

By maintaining control of the credit report, a renter doesn’t have to take the risk of others making mistakes. In addition, credit data is not perfect and there may be inaccuracies on the report as well. If a renter is running his/her own report, the information can be reviewed right away. If there are mistakes on it, the renter can inform the credit bureaus immediately.

On the other hand, if the landlord runs and views the report first, the renter’s application may be rejected due to inaccurate or incomplete information, which is unfair to both parties. The renter can lose a dream apartment and the landlord can lose a great tenant.

Sarah Ziehr · Answer

I think that is a terrible idea, because anyone could easily forge their credit report.

Get a third party to collect the fee and run the reports (including criminal background checks). Then they just present the findings to you to make a decision. Easy peasy!

Justin Fraser · Answer

That last time I filled a vacancy I used Cozy.co - the tenants pay for their report via the service, and you receive it directly via Cozy- there is no opportunity for the tenants to change the report. This would resolve all of your concerns listed above, except for the need for tenants to pay for multiple reports if they apply multiple places.

Jeff B. · Answer

I would never accept such a report AND I want all that data for the case I need to go to court or collections. Additionally, I get real reports with full list of creditors and the payment history, which is how I evaluate the report.

Kyle J. · Answer

I run my own credit reports and will continue to do so. All of the "benefits" for the landlord that you listed for allowing a potential renter to pull their own reports, aren't benefits at all in my opinion. For instance the benefits you listed were:

- "No need to collect SSNs". Wrong. You should still be collecting them at some point whether you run the report or your potential renter does. It's an important and unique identifier for that person and you may need it if the tenancy ever goes bad and you have to collect/enforce a judgment against the tenant.

- "No need to ensure proper safeguarding of SSN". Again, I disagree. You should still be collecting them, and all of the personal information you collect as part of the application (i.e. name, DOB, driver license info, banking info, etc) should be safeguarded.

- "No need to use a third party credit reporting service". As I mentioned earlier, I run my own credit reports and get the applicant's full report (as opposed to simply a "recommendation" that some sites provide). It allows me to make a more informed decision, and although you mention it is "expensive and time-consuming" I personally find it to be neither.

- "No need to argue over who pays". I never argue over who pays. The applicant pays an application fee which covers the cost.

- "No need to send the credit reports to applicants". You are not required to send credit reports to applicants nor should you ever do this. If you deny an applicant or take any adverse action (i.e. charge higher security deposit, require co-signer, etc) based on information in their consumer credit file, then you should be sending them an adverse action letter which basically tells them what consumer reporting agency supplied the info you relied on, the contact info for that agency, and how they can get a free copy of their own credit report. Should be about a 1 page letter and every credit check company I've ever used even generates the letter for you.

Honestly, I don't see any advantage whatsoever to NOT collecting SSNs. I want to know as much about my future tenants as possible. It's all part of a good, comprehensive screening process.

Mike Hanneman · Answer

I also would want to pull the credit background checks myself.

I don't understand why so many people are so worried about the SSN??? For $10 or less I or anyone for that matter can get a list of anyone's SSN and information.

Thomas S. · Answer

I am not familiar with the process involved in a applicant doing their own credit report and having it sent directly to the landlord. I do not know if that can guarantee it is the actual applicants report as opposed to someone else with the same name. I would never trust it to be reliable.

Bottom line is that as long as it is a complete report as a landlord would receive from doing it themselves through a third party it is fine. If on the other hand it is not a complete report and is only a score with a recommendation it is useless. You might as well have the applicant tell you their score and then do your own report if they get through pre screening. It is of exactly the same value.

90% of the information on a credit report is not about the actual score at all. What is of importance is their 30,60,90 day pay records, credit limits, percentage of credit used, what type of credit items they are defaulting on etc. A credit score of 650 tells you almost nothing about the tenants payment history.

I do my own and will continue to do so for the minor cost of $25. If I do not have a full and proper report I have nothing of real value. Landlords need to not be lazy or cheep when choosing tenants.

And what is the issue with landlords not wanting to gather every shred of information possible. It's part of operating a business and a gauge of your applicants acceptability. When a applicant is reluctant to provide their SI# I reject their application. If they can't trust me I can not trust them with my property.

Clifford Thomas · Answer

@George

@George Cen

Like the other post I've used applyconnect and it works well for me. The renter doesn't have access to change the report, they press a share button and the same copy is sent to you electronically. The renter has to pay (with a debit/credit card ) before the report is generated, It also has an app for your smart phone.

George Cen · Answer

@Kyle J. I always appreciate comments and differing viewpoints because I am still developing that "system". Currently I think what I laid out may work nicely but there can be things I am missing or have not considered. Hence, I want to hear others do things. Thanks for taking the time to offer your perspective!

Kyle J. · Answer

I get your points. I think if you have a system that works for you (whatever it is) then you should stick with it. I have a system that works for me and wouldn't think of doing it a different way, so I understand how you feel.

In my case, I have all of my applicants fill out my application (including their SSN) and then I screen them all the exact same way, which includes me running a credit check on them and pulling a full/detailed copy of their credit reports. That way it's consistent between applicants and I'm evaluating them all the same way.

Believe it or not, I've had applicants who didn't have internet access or even an email account. So I don't know how they would have pulled their own report and had it sent to me in a timely fashion to review.

George Cen · Answer

Hey @Kyle J., thanks for your comments. I'd like to offer my thoughts.

#1 and #2 - I wanted to clarify that there is no need to collect SSNs when you are reviewing applications. Once you decide on the applicant to continue on with, then you can get his/her SSN as part of the next step (i.e. lease). I don't believe there is a need to collect SSNs from applicants who you reject? I think this addresses your first 2 points.

#3 - I agree, you should the applicant's full report rather than a "recommendation", but you don't have to run it yourself to get a full report.

#4 - I think this depends on the market. In places where it is a renter market, tenants have more leverage and I've talked to landlords who have taken the cost because applicants wouldn't pay. Of course in a landlords' market like in Manhattan, this never is an issue as the applicant always pays.

#5 - The same hassle would apply as you would have to deal with the applicant's request and also dealing with your credit service provider to send the letter. Maybe this won't take much time for 1 applicant but what if you have 10, 20, etc.? If you can avoid this entirely, why not?

Have applicants/renters run their own credit reports?

Have applicants/renters run their own credit reports?

Benefits for Landlords

Benefits for Renters

Most Popular Reply

16 Replies