Prevent Problems
Also see: Tenant Screening | Cause for Refusal
A relatively new trend in rental housing uses credit reports, reporting agencies, and professional collectors as a regular part of business. Credit information can be a tool more important to screening and selecting good tenants than personal references or checking with previous landlords.
In our electronic age a credit report is available quickly, at a very nominal cost.
There is another important benefit that costs nothing. Dead beats, who know that you will check their history, and report your rental and credit experience with them, may not wish to pursue an application and further waste your time.
As important to selecting a good tenant, is documenting the reason for rejecting a bad one. A credit report with negative information, attached to the application in a file, could be the best insurance you could buy against a later charge of discrimination.
There are now many easy ways for landlords and property managers to get credit information about tenant applicants. As a result, it is almost inexcusable to make tenant decisions without good information. RHOL members can access our Credit Web and obtain credit reports, eviction information and criminal records, on-line, in a matter of a few minutes.
Utilizing credit and collection services should also make possible getting some of the money you have been writing off as uncollectable. A money judgment, although helpful, is not absolutely necessary to collect past due rent.
A judgment will remain on a credit history for ten years and is collectable for all of that time. Rent or damage owed you can appear on a former tenants credit, and you can pursue collection for many years, depending on your state law.
Trans Union, Equifax and TRW, (now Experian), are the major players in the credit data-base business. The information age has helped them to compile very extensive credit information on almost every American, keyed to their name, social security number and date of birth. The information has been derived mostly from monthly reporting by major credit providers like; banks, finance companies and national retailers.
Local credit rating agencies affiliate with one or more of the national data-base companies, then sell individual credit reports consisting of a computer-generated compilation of facts to their subscribers. They also contract to collect delinquent accounts on behalf of their customers and report bad debts for them. Utility companies, local or regional retailers and the health care industry have traditionally constituted the major clients for a local bureau.
Any person can investigate the contents of their credit file by contacting one or more of the approximately 2,000 credit bureaus, or consumer credit clearinghouses, in the United States. The nearest ones can be found by looking in the telephone Yellow Pages under “Credit Rating or Reporting Agencies.”
Although the Fair Credit Reporting Act requires that a bureau give a person no more than an oral or written credit history review, many bureaus will go beyond the technical requirements of the law and furnish the same computer-generated compilation of facts that they give the banks, retailers and other companies that subscribe to their service.
An individual who has been denied credit on the basis of negative information from a credit bureau can obtain this review without charge within 30 days of the denial. Sometimes there is a small fee for such a credit check.
After inspecting this record of past credit behavior, a consumer can question any item believed to be inaccurate, misleading or vague. The credit bureau must then investigate and remove any item that cannot be substantiated.
When a bureau affirms, rather than removes, a questionable item, an individual can present a 100-word explanation that must be placed in his or her file. And whenever an adverse item is deleted from the file or an explanatory statement is added to one, a consumer may request that the credit bureau inform every credit grantor who received a report within the last six months.
Landlords are among the leading credit grantors yet they have been very lax in using the credit tools available to them. Rental property owners and managers should:
- Obtain a credit report on every pre-qualified tenant applicant prior to signing a lease.
- Establish a credit reporting relationship with an association or agency.
- Utilize the skip tracing and collection procedures available to you.
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