What landlords look for in a credit check?

Landlords are looking for the following in a tenant’s credit report:

1.      Low credit score

2.      Late payments

3.      Payment gaps

4.      Significant debt load

5.      Derogatory marks

6.      Delinquent accounts in rental history


1.      Low Credit Score

There is not a definitive “good” credit score, and many factors determine creditworthiness. Landlords need to review a full credit report to understand the applicant’s credit history and to get the story behind the score.


2.      Late Payments

As a landlord, you want tenants who will pay rent on time, all the time. If a tenant has a history of making timely payments, then there is a greater likelihood they will pay rent on time. If your applicant has repeatedly failed to pay credit cards, loans, or utility bills by their due date, then what is to say they wouldn’t do the same when it comes to their rent responsibilities?


3.      Payment Gaps

Credit reports typically show anywhere from 7 to 10 years of an applicant’s credit history. Landlords should look for any gaps in payments to loans, credit cards, and other financial obligations. Consistency is a crucial part of financial responsibility, as you want a tenant to consistently pay rent each month.


4.      Significant Debt Load

A tenant’s debts may affect their ability to pay rent each month. If a prospective applicant carries excessive debt, then it may render them unable to handle rent along with all of their other financial obligations.


It’s also important that you examine your tenant’s income and assess their rent-to-income ratio when considering debt load. Landlords typically look to see that a prospective tenant makes at least three times the income compared to rent.


5.      Derogatory Marks

Derogatory marks may indicate that your prospective new tenant is not financially responsible. Derogatory marks could include:

-          Credit card charge-offs

-          Accounts in collection

-          Car repossessions

-          Bankruptcies

If your applicant has many collection accounts and judgments, then it may indicate that they’re not financially responsible and unlikely to abide by your lease terms as they relate to rental payments.


6.      Delinquent Accounts in Rental History

If your prospective tenant’s previous landlord has reported their payment history to a credit bureau, then this will show up on their credit report. If your applicant owes an outstanding debt to their previous landlord, then it may be a red flag and indicate that they could fail to pay rent when living in your property.