What Property Managers Look For when Doing Credit Checks
Property management companies manage rental properties such as homes, condominiums, apartments, and townhouses. As part of the tenant screening process, property managers perform a credit check. This allows them to see how financially responsible a potential tenant is and determine if they had previous housing-related financial issues. When checking an applicant’s credit report, property managers will look at the following:
The Possible Tenant’s Credit Score
The credit score indicates how financially responsible a person is. Often, a low score means the person has missed lots of payments, defaulted on loans, or had significant financial issues such as repossessions or bankruptcies. Bankruptcies remain on credit reports for up to ten years. Property managers will check a bankruptcy record to see all of the accounts and companies included in the bankruptcy. Often, they will favor a possible tenant with a discharged bankruptcy over one with a pending bankruptcy. Meanwhile, a high score means they are paying their bills on time and that they only have a few accounts sent to collections or court. Property managers want a tenant to pay rent on time.
Previous Rentals and Evictions
Property managers can run credit checks to know more about a possible tenant’s past rentals. A person’s rental history is used to determine their behavior in future rental situations. Property managers check a person’s credit report to see if the person still owes money to a previous landlord.
Moreover, credit checks are also performed to check previous evictions. Evictions may not appear on a credit report; however, property managers look for them when they review a possible tenant’s credit history. Also, a short sale or foreclosure is a red flag. A person who has been forcefully evicted from a property is a high-risk renter.
Typically, Glendale property management professionals screen applicants, lease properties, collect rents and handle minor repairs. If a person’s credit report shows they have been forced by their creditors to pay their debts, the manager may consider them less desirable.
How the Person Manages their Credit
Property managers also look at the types of debt a possible tenant carries and how responsibly they manage their money. For instance, if their credit report shows they have some maxed-out credit cards, this may indicate the person does not manage their money well and might not be able to pay rent on time.