There are many regulations that landlords must abide by, such as not discriminating by race, gender, or disability. Because many of these stipulations are required by law, it makes sense that some might wonder if it’s legal or ethical to require credit reports or specific credit scores from prospective tenants. This is an excellent question to ask – it’s always better to be safe than sorry, because “sorry” can mean fines and damage to your business!
Here’s the simple, straightforward answer: yes, in the majority of cases, it is perfectly fine to require credit reports from your applicants. It’s not discriminatory, it’s a method of protecting your investment and your business. It’s important to know that a tenant makes good on their payments and has a history of paying on time. We’ve gone over how to read credit reports and what you can expect from FICO vs VantageScore in other posts, and that’s good information to have when making your decisions. Some landlords may want to require a certain score, so knowing what constitutes a good credit score between different scoring systems helps you make the right decision without potentially passing over a solid prospective tenant.
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In addition to requiring a credit report, it’s perfectly fine to require criminal background checks, eviction history, and other similar information. There are many services that offer everything from a simple Pass/Fail credit check, which is inexpensive and doesn’t give you a full report to review, but instead allows you to select a standard level and receive a report that tells you whether an applicated “passed” or “failed.” More detailed information like a full credit report and background check costs more and can require an on-site visit, but is still manageable and gives you much more detail about your prospective tenants.
Many landlords and property managers go for an option that isn’t cost-prohibitive and have the credit report paid by the tenant. We offer several options, including our RentalConnect program, which is detailed below. A full screening can cost upward of $100, which can be very limiting. Even asking a tenant to pay $50 with their application for screening can limit the number of applicants you see. Thankfully, there are many more affordable options at your disposal.
To better help you make the right decision, our RentalConnect program offers property owners and landlords a great alternative to the expense of full tenant screening. This service requires no on-site visit, sign-up, or membership fees, making it extra convenient. The $34.95 service fee is paid by the applicant. Available 24/7, RentalConnect is fast, easy, secure, and delivers reports needed to make an informed decision, including a credit report, a national criminal search, and a national eviction search. Reach out to us for more details!
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