A contract of lease is a contract between a lessor and a lessee for the lease of a certain property of the former in consideration of the payment of rent by the latter. One of the essential tools a landlord has under his or her disposal to gauge the amount and type of risk a potential tenant maybe is a credit check. This article will provide a basic discussion of what a credit check is and then provide a step-by-step guide for a landlord who wants to conduct a credit check.

Credit Check for Landlords: Credit Inquiry Defined

A tenant credit check is an investigation conducted by a natural or juridical person provided he or she has a legal purpose and written authorization from the person to be subjected to the same. Preferably a credit inquiry should be requested from one of the major credit reporting agencies. The credit inquiry consists of a credit report and an optional credit score for an additional fee to determine the following information regarding a potential lessee:

1. Personal information check

2. Credit history

3. Payment History

4. Amount of debt

5. Outstanding judgments, garnishments, bankruptcy, etc.

Credit Check for Landlords: Step 1,2,3

Under the law, a tenant credit check is a valid reason to conduct a credit check. This is because the law recognizes the need for a landlord to do a background check on a potential tenant in order to form an informed decision as to approval or denial of the application, the amount of rent to be collected, as well as the amount of deposit and advance payment to be required. Here is a step-by-step guide:

1. Determine who will occupy the property as well as who will be the named lessee. Remember that a lessee maybe a person, corporation, partnership, agency trust or any other business or nonprofit entity. You need the credit report of the actual entity named as lessee and if you are unsure of the same get the names of all the occupants or the incorporators of the corporation or partners in the business or enterprise.

2. Require the named lessee or persons discussed above to give separate authorization letters for the credit inquiry. If the named tenant has an existing credit report make sure it is unaltered and not more than six months old. To make things easier the letter should contain the following information:

a. Full name

b. Two of the most recent address

c. Social Security Number

d. Place of Birth

e. Reason for the inquiry (i.e. for contract of lease)

3. Request a credit report from the top three or four credit reporting agencies. Remember you can request a credit report online via the applicable website (i.e. Experian, TransUnion, Equifax).

Credit Check for Landlords: Report

Lastly, remember to inform the applicant tenant of your decision to approve or reject the application. Any rejection should state the reason for the same and the landlord can even state that the rejection is based on the information found on the credit report. Remember this is mandatory after conducting a tenant credit check.

Are you looking for more information regarding landlord credit check ? Visit http://www.creditcheckforlandlords.org/ today .

Are you looking for more information regarding landlord credit check ? Visit http://www.creditcheckforlandlords.org/ today .

Author Bio: Are you looking for more information regarding landlord credit check ? Visit http://www.creditcheckforlandlords.org/ today .

Category: Finances
Keywords: credit check,credit report,credit inquiry,tenant credit,credit inquiries,tenant credit check