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Credit Checks - Part 1. Should I credit check my prospective Tenant?

February 11th, 2015.

Topics: Landlord Advice
Credit checks are a vital tool for assessing your risk when selecting a new Tenant for your rental property.  While a prospective Tenant may appear solid when you first meet them, their credit check will give you a much more honest picture about what they will be like as a Tenant. People with bad credit become very crafty at targeting Landlords whom they think that they can pull one over on, and once they are in your property it can be very hard and expensive to get them out as they are often well schooled in the rules of the Tenancy Tribunal as well. 
 
Characteristics of applicants with bad credit that we see on a regular basis include being overly pleasing at the viewing, stating their previous addresses as having private Landlords (whom are actually friends in on the play), using people to front the application such as a partner or parent whom they know have clean credit, advising that they can move in straight away and have all the money ready to go and lastly forgetting to sign the application form so that you cannot run the credit check on them.
 
A credit check can tell you A LOT about what sort of Tenant they will be when it comes to paying rent, so it’s really important that you ascertain exactly who is going to be living in the property once the tenancy commences. Insist that all persons who will be contributing to the weekly rent payments complete an application form and provide a copy of their ID. While a credit check may seem expensive and it may be tempting to overlook doing one when the applicant seems so nice, the cost of a couple of credit checks is significantly cheaper than the cost of evicting a Tenant who does not pay the rent.  In our experience evicting a non paying Tenant can take around 4-6 weeks and costs you thousands in lost rent and damages.
 
Lastly, don’t forget that you must first obtain the Tenants written consent before any credit check can be carried out and that you must keep the application on file for 7 years.
 
Click here to read the second part of this article – What to look for in a credit check

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