How to Conduct a Credit Check on a Prospective Student Tenant

Monday, January 20, 2025

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After finding a potential student tenant, it’s time to make sure they’re a good fit for the rental property. One of the most important steps after finding a lead is the tenant screening process.

 

A credit check is one of the screening tools landlords use to screen prospective student tenants. This step provides valuable insights into a tenant’s financial habits, helping to determine their ability to meet rental obligations, even if they don’t have an extensive credit history.

 

Here are some crucial steps in conducting a credit check for a potential student tenant:

 

  1. Get consent

 

Before running a credit check, it is essential to secure the prospective student tenant’s written consent. Landlords should clearly explain to the tenant that a credit report will be checked and outline the purpose for doing so—namely, to assess the tenant's ability to meet the financial obligations associated with renting. Additionally, it is important to reassure the tenant that all personal information will be kept confidential and secure throughout the process.

 

  1. Obtain a Credit Report

 

TransUnion and Equifax are two options for a credit bureau in North America. These reports provide an overview of the prospective tenant’s financial behavior, including their credit score and any outstanding debts. There might be a small fee associated with obtaining these reports directly from the bureaus.

 

Another option is to use agencies that offer tenant screening. These agencies often ask for proof of identity from landlords to ensure they own the property and will require landlords to show a copy of their ID or property deed.

 

Alternatively, landlords can ask the potential tenant to provide their own credit report. Consumers are entitled to one free credit report per year. This can allow landlords to review the information without incurring additional fees.

 

  1. Review Credit Report

 

Credit reports have information such as the tenant’s credit score, payment history, outstanding debts and public records. When reviewing a student's credit report, it's important to keep in mind that many students may not have had the opportunity to establish a strong credit history. Therefore, certain aspects of the report may not be as comprehensive as that of someone with years of credit experience.

 

 

Credit scores range from 300 to 900; the higher the score is, the better it is. According to Equifax, credit scores that range from 660 to 900 are considered good. However, for students, a lower score or minimal history is common and not necessarily a sign of poor financial management. It may simply be due to a lack of experience with credit.

In addition to the score, reviewing payment history and any existing debts is useful. While these sections might be less detailed for students, any outstanding debts or missed payments should still be considered when evaluating the tenant’s financial reliability.

 

  1. Consider Alternatives for Students with No Credit History

 

Not all students will have a credit history. If the prospective tenant is an international student or a newcomer to the country, you are unlikely to get their credit history. In this case, there are other factors to evaluate:

 

  • Guarantor or Co-Signer: A guarantor is someone who will be responsible for paying the rent in case the tenant stops paying for any reason. The prospective tenant can choose to have their parent, relative or someone else they know with a strong financial background as their guarantor on the lease.
  • Pay Stubs: If the student has a part-time job, a stipend, or a scholarship, this can demonstrate their ability to make payments.
  • Rental History: If the student has rented previously, references from past landlords can provide insight into their reliability as a tenant. You can verify if the student paid rent on time, kept the property in good condition, and adhered to the lease terms.

 

Keep in mind that student tenants may not have the same financial stability or credit history as more established adults. It's important to weigh all available information to make a decision that minimizes risk, while still giving students the opportunity to rent.

 

SEE ALSO:  BadCredit.org



The Places4Students.com Team