You get the credit bureau report back on your applicant and the bureau never heard of him. That will make you think, won’t it? Of course, you immediately think the worst. There could be several reasons that the credit bureau couldn’t find a record though.
The first and most obvious thing that comes to mind is that your applicant is lying to you and trying to hide what he knows you will find if you pull the report that really does exist, if you plug in the correct information.
Second, it could be that he simply has no credit established anywhere. It’s hard to believe that in this society anybody could have slipped through the omnipresent electronic net, but it does happen every so often. That could be a legitimate explanation particularly with young people.
Third, he simply may not be in that particular credit bureau’s files. There are three major credit reporting bureaus in the United States. Make sure you get a report that searches all three.
You Can Find Out Why
You can find out why your applicant has no record.
- To begin, verify the social security number with the applicant. This could be as simple as having the applicant repeat it for you. Possibly he or you transposed some numbers. You may want to look at the card yourself to be sure the number is correct. If your applicant can’t verify his social security number, run up the red flag. Something is going on, it isn’t good and you don’t want to be in the middle of it.
- Second, if the number is correct, look at the rental applicant. What types of credit does the applicant indicate he has – credit cards, car loans, student loans? If the space for types of credit is blank, be sure that the blank lines are because there is no credit, rather than a lie by omission. Remember though, someone with credit cards will have a credit record, period, end of story. So if the application says he has a credit card and the social security number verifies, run the red flag all the way to the top of the pole.
- Third, if your applicant says he has no credit, look at reasons why that may be. As I mentioned earlier, it could be simply because he is too young to have established any. And occasionally, you run into people who proudly pay cash for everything.
You can and may deny an applicant because you cannot find a credit record as long as you include that in your rental policies and standards – [rental criteria list]. Language such as “If we cannot verify previous landlords and addresses, employment or any statement, including your credit history on your application, it will be rejected.”
Credit History Tips
Following is a list of what to consider when reviewing a credit history:
A Pattern of Financial Responsibility: You want your prospective tenant to have a history of prudent or conservative spending. Avoid rental applicants who seem to be using excessive credit and are living beyond their means. If they move into your rental property and experience even a temporary loss of income due to illness or a job situation, you may be the one with an unexpected income loss as a result!
An Accurate Address: You want to be able to verify prior living situations, so carefully compare the addresses contained on the credit report to the information provided on the rental application. If you spot an inconsistency, ask the rental prospect for an explanation. Maybe she was temporarily staying with a family member or simply forgot about one of her residences. Of course, be sure to contact prior landlords.
A False Social Security Number: You want to make sure you’re reviewing the credit report of your actual applicant. People with poor credit or tenant histories have been known to steal the identity of others, particularly their own children by using someone else’s social security number. One way to prevent this problem is to make sure your credit reporting service provides a Social Security number search.
Robert Griswold is a hands-on property manager with more than 30 years of experience, having managed more than 800 properties representing more than 45,000 rentals. He owns and runs Griswold Real Estate Management, Inc. with offices in southern California and southern Nevada. His book Property Management for Dummies is available at www.LandlordBooks.com. For more information, visit www.griswoldremgmt.com.