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Do You Need To Get A Credit Reference From Your Rental Applicants?

Do You Need To Get A Credit Reference From Your Rental Applicants?

Are you looking for new renters for your investment property? If so, you must make sure they have the ability to pay rent on time, every time. That is probably why you are thinking about running a credit check on all of your renters. In some cases, this might be enough. In other cases, you might need to get a credit reference. What are some of the reasons why you may need to get a credit reference from your renters?

What Is A Credit Reference?

Just like the credit check itself, a credit reference is a way to look into the credit background of your renters. This could include a statement of assets, a letter from a former landlord, or a letter from an institutional lender. Essentially, you want this letter to say that the applicant paid his or her bills on time. This is a great way for you to ease your mind about your renters defaulting on their rent. 

Is It The Same As A Rental Reference?

No, a rental reference is not the same as a credit reference. A rental reference will cover other things, not just the ability of the renter to pay his or her bills. For example, a rental reference will also talk about the behavior of your renter. Did they damage the property? Did they have a lot of overnight guests? Did they cause problems? You may want to get a rental reference as well. 

Why Is A Credit Check Not Enough?

There are a few reasons why credit reports might not be enough. For example, evictions do not appear on them. They also don’t include the rent payment history, details of the renter’s income, or whether your renter was a nuisance to other people. You want a comprehensive credit reference because it will speak to the qualifications and character of the person renting from you. Therefore, you might want to get a credit reference from your rental applicants.

What Goes Into A Credit Reference?

A credit reference will mention the manner in which the writer knew the renter. The credit reference should go into detail about the payment history, the income of the renter, and the ability of the renter to uphold his or her financial obligations.

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