Free Credit Check for Landlords: Does Such a Thing Exist?

It’s typical to wonder if there is a free credit check for landlords; you certainly don’t want to rent to someone without doing background checks. You will get burned horribly if you don’t screen your tenants. The short answer is there isn’t a simple online source to do credit checks on other people for free. When you search something like “free credit check for landlords” you’ll get all kinds of sites trying to sell credit reports, many claiming “free”, but it doesn’t really exist. However, there are a number of ways to do background checks which don’t cost money. Keep in mind a credit check implies getting a consumer’s report of their credit, this will be provided by one of the big three credit bureas Experian, Equifax or Trans Union (even if sold by some other agent or subsidiary). A credit report by itself is not a complete background check. Things a credit report won’t tell you include:

  • Criminal History

  • Most Rental Histories

  • Everything they’ve been late on

  • Anything else that should concern you, like sources of income

  • Reliable accuracy; most credit reports contain serious errors

In fact, in my property management experience, I’ve found the typical consumer report to be only marginally helpful, and the FICO score even less so. Businesses have to pay money to the credit bureaus to be able to report bad credit; so, banks will likely report, but most landlords won’t. The extra expense isn’t worth it to them. Also, the consumer report may tell you there was a bankruptcy, but not why. There’s a difference in a bankruptcy caused by a serious illness where insurance refused to cover large medical bills and one caused because someone handles money poorly. However, there can be valuable information in the report, so how do we get a free credit check for landlords?

Get the prospect to provide it. They’re entitled to one free copy of their consumer report every year. Just insist they provide it to you. If they don’t have it, it’s easy to go online and get (and actually a good idea to check).

Get the prospect to pay for it. Experian even offers a service called Experian Connect where you, as landlord, can set up an account (no cost to you) where the tenant can authorize you to see their report online. While this is technically a free credit report to landlords, it costs the tenant $14.95. Since they can get one a year for free, this doesn’t make much sense – unless you require a current one (which is a good idea) and they obtained their free one several months ago.

Some Warnings To Keep In Mind

You must have proper written permission from an applicant to use their consumer report. Any time you use a consumer credit report in considering a rental, then you are under the Fair Credit Reporting Act, and that requires if you take any adverse action (deny the application, require extra rent, deposit or co-signer, etc.) you have to give a proper Adverse Action Notice. If you don’t, you could have serious legal problems – though for small, first-time offenders the law allows some leniency. Even if the credit report was positive and made you more inclined to rent to the applicant, yet you decided not to for some other reason (not enough income for example) then you still have to give the Adverse Action Notice because the consumer credit report was part of the decision.

Do Your Own

After years of renting, I developed my own credit reporting system. The normal credit reports and FICO scores are so poor, experience taught me things to look for outside these reports. We don’t pull credit reports, but rather do our own research (much of it available online now). Not exactly free, but I’m not paying another service for it, and it normally only takes us 15-20 minutes. Granted, this isn’t worth the trouble of setting up if you just rent here and there, but if you rent a lot, consider developing your own methods of background check. Even with a credit report, you still need criminal histories, prior landlord checks and other indicators to get a real idea if you want that applicant to rent your precious property!

Category: Background Checks