How to Pass a Homeowner’s Credit Check
Don’t let credit problems stop you from finding your best rental housing option. Learn how to pass a homeowner’s credit check.
Your credit can affect your home
When you apply for credit, you expect a potential lender to check your credit report. The lender wants to assess the risk of loaning you money before approving your application.
Have you realized this potential owners could you also check your credit report? A 2014 study by the credit bureau TransUnion found that nearly half of homeowners surveyed considered credit check results to be one of the top three factors in assessing a potential tenant’s demand. Homeowners want proof that you’ll make your payments on time, just like lenders do.
Is your credit report properly compiled by the three major credit bureaus (Experian, Equifax, and TransUnion) – and if so, is it properly presented to the owner? You can’t take either one for granted.
Mistakes have been made
A recent Federal Trade Commission (FTC) case highlights potential problems with tenant credit checks. Not all landlords check a potential tenant’s credit directly – some use landlord associations or tenant screening services to simplify the process. If the screening service gives incorrect information, your rental application may be refused even if your credit is prime.
The FTC recently fined RealPage, Inc., a Texas-based rental monitoring company, $ 3 million for “failing to take reasonable steps to ensure the accuracy of tenant monitoring information provided to his clients “.
RealPage’s automated system used broad search criteria to find information about applicants, finding matches for exact last names and dates of birth but similar but not exact first names – with sorting and checks. insufficient accuracy thereafter. For screening purposes, parts of your file may have been mistaken for people with the same name who have a criminal record or bad credit history. The leases were refused on the basis of other people’s records.
You should also not automatically assume that the information from a credit reporting agency is correct. Your credit report may contain errors such as late / missing payments that were made, or accounts that were assigned to you incorrectly – or worse, fraudulent accounts or charges that are signs of theft. ‘identity.
Before looking for rental options, get a copy of your credit report and review it carefully. Correct any errors or signs of fraud immediately. You can preemptively show a potential homeowner that you have good credit and that a closer look isn’t necessary.
Pass the background check for a new apartment
What if your credit report is accurate, but it doesn’t paint a pretty picture? It’s time to start the credit rebuilding process.
Honestly assess your credit report as if you were a homeowner. If someone you didn’t know had the same credit history as you and you looked at it from a landlord’s perspective, would you expect to receive regular rent payments from that person? If not, how will this person convince you that he or she will be a good tenant?
While missed payments on your credit report for up to seven years, homeowners are much more concerned about your current financial behavior. A single late payment from the past usually does not justify rejection. However, a history of missed payments spread over time is more difficult to explain, as is a recently missed payment. Perhaps you now have a higher income or a more stable life situation that will ensure regular payments. Be prepared to stand up for whatever cause it is, with evidence to back it up.
During this time, make sure all payments are made on time and adjust your budget to start paying off any outstanding debt. You need evidence of greater fiscal responsibility. This can mean delaying your rental search by a few months, or longer if your credit report shows repossessions or defaulting credit / loan accounts.
Avoid opening new lines of credit when looking for a rental. Homeowners may find that you have more debt than you can afford. If you need to open a new loan, have a valid reason and show how you can handle the new payments.
In general, the same rules for improve credit scores apply to better tenant selection results – but your current behavior plays a bigger role.
Don’t let credit problems stop you from finding your best rental housing option. Do an honest assessment of your finances to find out what you can afford, then check your credit report for any potential issues. Correct any errors or signs of fraud immediately.
Make sure your landlord has your full name and date of birth to avoid confusion from the landlord’s perspective. Have copies of your credit reports on hand to refute any poor screening results.
Does your credit need work? You can’t fix past missed payments, but you can make sure all future payments are made on time. Help your credit profile by keeping overall debt low and not opening new credit accounts during your rental search.
Be prepared to explain any significant issues like repossessions or delinquent credit cards / loans. You are going to have to make a solid case. Prepare all your documents to show how the situation was handled.
Get your credit in the best possible shape before your rental search. A good credit report increases your chances of getting approved for a lease, but more importantly, it shows overall financial health.
This article was provided by our partners at money advices.com.
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