According to a recently conducted study in Dubai, about 80% of landlords reported that credit checks are the biggest deal-breakers when it comes to accepting a tenant or not. With the increase in the number of cases at the Dubai RDSC (Rental Dispute Settlement Center), landlords in Dubai are under even more pressure to only accept tenants with excellent credit. It’s imperative that you run a tenant credit report before signing any contracts.
What is a tenant credit report?
Credit reports screen people for their financial history. You’ll discover if your potential tenant has a financially stable history. Credit reports are invaluable tools for landlords.
What info is on a tenant credit check report?
First, you must receive written permission from your prospective tenant to go forward with a credit check. The information provided includes:
Identification information
- Name
- Date of Birth
- Address
- Social security number
Credit history
- You will be able to access up to 10 years worth of account transactions, loan information, and credit card account history.
Public records
- Any evictions, tax liens, and bankruptcies
When reviewing a tenant’s rental application, a credit check is not the only metric to consider. Yet, no matter how clean their background information appears, a credit report is critical. In the end, you need to ensure that you’ll get paid.
Both a credit check and a background check are needed in the long run
Here are some common reasons why a landlord should always run a tenant credit report:
Financial capability
Perhaps the most obvious reason why a landlord would go fishing for info about a potential tenant is to establish if they have a firm financial foundation. In our day to day conversations, we always sweep matters salaries under the carpet. But when it comes to the rental business, this is absolutely important.
As the landlord, ensure that the person isn’t plagued with habitual disregard to deadlines on his other obligations. And yes just in case you didn’t know, the same could be replicated when it comes to payment.
Confirm identity
Another important reason why you should run a tenant credit report is to confirm their identity. With the increasing technological advancements, everything is virtually possible including identity thief. Cases of impersonation are on the rise where people use names of strangers or family member to escape the firm grip of credit check. As a landlord, ensure that the application information matches the credit report and that the dates are in consonance with everything.
Criminal background
Unfortunately, in life, past mistakes have the uncanny of catching up with us. Fortunately, such information can help you catch a dishonest applicant who may choose to conveniently omit such information on the application. When you discover they had been forcefully evicted a decade before yet they didn’t disclose such info, they aren’t honest.
Timely and consistent rent payment
Having a healthy credit score is like a kid having a new pair of shoes. It’s the most important thing in life at that moment and will do anything to keep them new. It would be lackadaisical for someone with an excellent credit score to mess it up. As a landlord, you can leverage that to ensure that they pay on time as timely payment will always be their priority.
Establish major derogatory events
Bankruptcies, previous evictions, repossession, and even collection accounts can spell trouble for you as the landlord when it comes to the tenant’s capability to pay rent on time. Unless such occasions were warranted by illness or job loss, it’s better to turn down such a tenant. Especially if an issue recently happened.
If the credit check comes out positive
If the tenant has an excellent credit rating, then you can decide to go ahead with the screening process. However, as earlier indicated, credit checks shouldn’t be the only parameter to use to determine their capability to pay on time. Never accept anyone into your rental apartment without having paid the security deposit. No matter how beautiful their credit score is.
If they have a negative credit report
If the prospective tenant has appalling credit, don’t summarily reject their application. It may be worth your time to find out why. Occasionally, credit reports are prone to minor errors which the tenant may not be aware of. In addition, it’s possible they had debt from time as a student which has affected their overall credit. They may be making an excellent income at the time of the tenancy and thus may be an ok option for renting after all.
Explain what your findings mean for your prospective tenant
Final thought
No matter how solid a prospective tenant appears on the surface, it’s critical for any landlord to run a tenant credit report. It may not necessarily be the easiest and fastest process, however, it could save you a trip to the RDSC.
At Blueground, we handle all aspects of screening tenants. If you work with Blueground, we act as your overall tenant and handle all aspects of the screening process on an individual basis. It’s an excellent option to consider, and you’ll never miss a month of rent due to poor finances!
The Landlord Resources blog is Blueground’s information hub for landlords and property owners.
Through tailored articles, landlords can find relevant information relating to renting out their apartments, decorating, maintenance & renovation, property management and rental laws specific to their city.
