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What Happens When a Landlord Checks Your Credit

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You’ve found the perfect place to rent and now — gulp! — the property manager tells you all you need to do is fill out an application so she can run a credit check. Whether you’ve got great credit, bad credit, or no credit, it probably makes you a little uneasy: Will there be a problem?

In this guide, you’ll learn all about landlord credit checks, how to prepare yourself for one, and options if your credit isn’t stellar.

When Can a Landlord Check My Credit?

Landlords typically obtain permission to order a prospective renter’s credit report when that person fills out a rental application, though technically written permission isn’t required.

Who Pays for It?

Landlords often pass the cost of credit checks on to tenants in the form of an application fee. Concerned about paying that fee when you’re not sure you’ll be approved? You may not have a choice, but if you do, consider the DIY credit check strategies below.

What’s in These Reports?

Property managers and landlords will often order what are called “tenant screening reports.”  Reports may include any of the following:

  • standard credit report
  • credit score or credit rating (A-F, for example)
  • criminal background check
  • sex offender background check
  • unlawful detainer and eviction history
  • employment verification
  • OFAC terrorist search

“People don’t realize there is a full tenant screening. It’s beyond (a standard credit report) in most cases, particularly in the case of a large rental company,” says Rod Griffin, director of public education for Experian.

The format of one of these reports will vary, depending on the company supplying it, but in terms of credit data, it should generally contain the same credit information you would see if you ordered your own credit report.

What If There’s a Problem?

You must be provided with a written disclosure that includes information on how to order a copy of your report for free if information from a consumer report is used to take “adverse action” against you.  It’s not just a matter of having your application rejected, however. The Federal Trade Commission explains that this notice is also mandatory if the company renting to you requires you to get a co-signer, or charges you a larger deposit or higher rent due to information in your report. In other words, if the information in your report results in something negative, you’re likely entitled to this disclosure and you can request a free copy of your report.

Of course, the landlord may refuse to rent to you if it doesn’t like the information it sees in your report. So it’s best to check your own credit in advance and be upfront about items that may be an issue.

How to Rent With Bad Credit

What if you have bad credit? “Just because you have bad credit doesn’t mean you aren’t going to pay your rent on time,” says Matt Briggs, founder of ScreeningOne, a company that provides tenant screening services. Landlords know that renters don’t always have perfect credit, and they are often most concerned that you will pay your rent on time. But historically, information about rent hasn’t been included in standard credit reports and confirming on-time rent payments often involves a tedious process of contacting former landlords. That’s changing, though, and some rental payment history now appears on some credit reports.

“Experian was the first company to include positive rent information in credit reports,” Griffin explains. Experian gathers this information from three companies; ClearNow, WilliamPaid, and RentTrack. Tenants pay their rent through one of these online platforms and the payments are then reported to the credit reporting agency. Currently only positive rent payment history is reported. (TransUnion also reports rental payments when available.) It’s also important to note that you or your landlord have to sign up for one of these services for your rent payments to be included in your credit file.

Of course, if unpaid rent is turned over to a collection agency the collection account will likely be reported to the credit reporting agencies. Collection accounts can significantly lower your credit scores, and can make it more difficult to rent another place in the future.

How to Rent With No Credit

Students, immigrants and those who are newly divorced may have a particularly hard time renting for the first time if they haven’t established their own credit history. If they can find a place, however, establishing credit by paying rent through a company that reports rental payments can be very helpful in the future. In the meantime, a landlord may be willing to rent to someone with no credit if they provide a co-signer. (Here’s what you need to know about co-signers.) Or they may be open to renting to someone with no credit as long as they can pay the first and last month’s rent along with a security deposit.

How to Check Your Own Credit

If you aren’t sure whether you will be able to qualify to rent a new place, ask the property manager to take a look at the free credit report you’ve obtained to see whether it’s worth applying. You may also ask them if they will let you use a service such as Experian Connect that will allow you to purchase a credit report for a modest fee and then share it with others you authorize. The landlord may still want to obtain a full tenant screening report, but hopefully the initial report will allow them to tell you whether you even have a chance. (A service like that can also be helpful in the case of a landlord who has just one house to rent, or may even be renting out the basement or a room in their own home, and can’t obtain a full tenant screening report on their own, says Griffin.) Equifax offers a similar service called Identity Report and TransUnion’s service is called SmartMove.

Will you be renting a home or apartment in the not-too-distant future? Prepare yourself by getting your credit reports in advance. You can get your credit reports for free from all three major credit reporting agencies once a year. It’s also a good idea to get your free credit score to see where you stand — you can see two of your credit scores for free every month on Credit.com. The score the landlord requests may be a different number, but all credit scoring models generally take into account the same five factors: payment history, debt, account mix, age of credit history and new credit.

More on Credit Reports and Credit Scores:

Image: iStock

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  • http://www.Credit.com/ Gerri Detweiler

    Normally a creditor can’t require an individual who qualifies on their own to have their spouse cosign – assuming you do qualify on your income and credit alone. However, since your spouse will be living there with you it’s possible they can require the credit check on both of you. If you really want to live there you may want to just spring for it. (They may also be doing a more complete background check including evictions and/or criminal records.) But another option may be to ask the landlord if your spouse can pull his credit reports from AnnualCreditReport.com and share that with the landlord.

  • Ryan J Gutierrez

    Does each inquiry from the landlord affect my credit score?

    • http://www.Credit.com/ Gerri Detweiler

      Yes, inquiries from landlords are hard inquiries.

  • erin

    What will show up on my credit report if a potential landlord does a credit check? I have been in my apartment for a little less than a year now, with my boyfriend. We had both our mothers co sign on our lease just in case because we were running out of time before my current lease was up. I have looked at my credit reports and I’m just wondering if they even ran a credit check on me at all..

    • http://blog.credit.com/ Kali Geldis

      Hi Erin — If your landlord checked your full credit report, then his/her name or the name of their rental management company should appear on your credit report in the section on inquiries.

  • gina

    Can a landlord charge you more on your deposit just because you have bad credit

    • http://www.Credit.com/ Gerri Detweiler

      That’s a common practice. I am not aware that it is illegal but you can research state landlord tenant laws to be sure.

  • http://www.Credit.com/ Gerri Detweiler

    They probably won’t know but if you break your lease it can be expensive. And if you don’t pay it, you can be turned over to collections. Have you looked at your lease to find out what it will cost to break it?

  • Pam Humsik-Woppert

    My daughter recently looked at a lower duplex and had to pay $40 for a background check to the potential landlord. Before filling out the application and turning it back in to him they found another place. She called that individual back and told them what happened and that she would return the application papers. Should she get her $40 back for a credit report that was never run by that landlord?

    • http://www.Credit.com/ Gerri Detweiler

      She can ask for her money back but not sure how easy it will be for her to get it back. I imagine it would depend on whether it was a refundable application fee.

      • Pam Humsik-Woppert

        Thanks for your response Gerri. The individual did contact her and set up a time to meet where she can then give him his blank app. back and he will refund her money.

        • http://www.Credit.com/ Gerri Detweiler

          Good to know – thanks!

  • keri

    My boyfriend owed an apartment complex $1300 for breaking the lease, and leaving stuff there 10 years ago, we paid $500 towards it a couple months ago because it was interfering with our chances to rent. It has now been removed due the statute of limitations, will this also have a negative affect when we try to rent? I’m not sure how it works when items are removed because of statute of limitations. Thank you on advance

    • http://www.Credit.com/ Gerri Detweiler

      It was removed from his credit reports because of the limits on how long information can be reported on credit reports. That is different than the statute of limitations. In fact, by making a payment he likely extended the statute of limitations which gives the collection agency additional time to try to collect from him. (I can’t say for certain in his case, but that’s how it works in most states.) This article explains the difference between the two time periods: Does Your Old Debt Have an Expiration Date?.

      Unless he is sued for the remaining balance, though, it doesn’t sound like this debt should reappear on his credit reports.

      Also I assumed there is not already a court judgment against him. If there is a judgment then my advice above doesn’t apply because unpaid judgments can be reported for a very long time.

  • Tina Marie

    My credit was checked by apartment leasing agent . It never showed up on my report. Is that normal?

    • http://www.Credit.com/ Gerri Detweiler

      Did you check all three of your credit reports? If you only checked one of them it’s possible the credit check went through one of the other two.

      If there was an inquiry into your report with any of the three major agencies that inquiry must be listed on your credit report for two years.

      • Tina Marie

        I checked equifax and transunion. My boyfriend and I filled out application. I filled in spouse section. Maybe they did a soft check on my credit?

        • http://www.Credit.com/ Gerri Detweiler

          I doubt it but maybe it’s possible.

          • Tina Marie

            I think they used experian because it did not show up on my boyfriends account either.

          • http://www.Credit.com/ Gerri Detweiler

            You can get your free Experian report at AnnualCreditReport.com and a free score based on Experian data from Credit.com. Might not hurt to check!

          • Tina Marie

            Thanks

          • http://www.Credit.com/ Gerri Detweiler

            You’re welcome – let me know you find out. Curious now!

          • Tina Marie

            I will, plan on checking online from laptop tomorrow.

          • Tina Marie

            Hi Gerri, I wanted to let you know that the apartment’s leasing agent used experian. The credit inquiry is on. My report

          • http://www.Credit.com/ Gerri Detweiler

            Thank you! Mystery solved. :)

  • Scott Rezendes

    Prospected landlord wants me to get a credit check and fax it to her. Can I give her a copy of my free credit report or is what she is looking for different.

    • http://www.Credit.com/ Gerri Detweiler

      If all she wants is a credit report that seems like it should work. (Though you may want to ask her if she has a place to securely store it once you send it!) Some landlords order full background reports which may also include criminal and eviction history, but that would be something she would need to order. Experian also has a produce where you can purchase a credit report to share securely with landlords: Experian Connect

      • Scott Rezendes

        Well she told me to do the credit check and she was going to do the background check and criminal check. I just didn’t know if a credit check and a credit report were the samething .

        • http://www.Credit.com/ Gerri Detweiler

          Yes they are. And the good thing when you check your own credit reports it doesn’t hurt your credit scores because the inquiry will be a soft inquiry.

  • Paris

    If a landlord says they are only doing a rental history check. What do they do to perform that?

  • Daniel Dos Santos

    Hi. I have had problems with a credit card and my account was closed, that was 5 years ago. Every penny was paid and didn’t have problems again. All my bills get paid on monthly basis and My rent has always been paid on time, will I get a bad credit report? I’m trying to rent a place and have references from previous landlords.

    • http://www.credit.com/ Credit.com Credit Experts

      Daniel —
      If you have other credit (car loan, credit card, etc.) and have paid on time that will help. Rent is most often not reported. But why not check your credit to see? You can get a free credit report summary from Credit.com. You can also check your free annual credit reports from each of the three credit reporting bureau. Scores come from information in your credit reports, so it’s important to be sure the information there is accurate. (If it is not, you can dispute it so inaccuracies can be removed.) Checking your credit will not hurt your scores — and in many cases, worried consumers discover their scores are higher than they thought. Good luck to you!

  • http://www.credit.com/ Credit.com Credit Experts

    Thanks for asking. We answered your question here:
    I Paid for a Landlord Credit Check. Don’t I Get to See It?

  • Amber Lee Walker

    Ok I have a question we have good rental history we always have paid on time the last house we moved out of is trying to charge us 9 Grand and already sent it to collections without sending us a itemized bill first so we are obviously disputing it we are worried though that it’s gonna affect our ability to rent another house when we move ( we are military) our credit isn’t the best but our rental history has always been good

    • http://www.credit.com/ Credit.com Credit Experts

      Amber —
      That is a tough situation. You may want to look for a place where credit won’t be checked or to offer some payment in advance to reassure the landlord. You can find more tips here: How to Rent With Bad Credit

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