1. Understand Key Terms

To understand your applicant’s tenant screening report, you need to know some specific vocabulary – specifically:

• Derogatory Items: Negative reports including late payments or delinquencies
• Tradeline: Another word for “account”
• Revolving: Charge accounts with minimum monthly payments, such as credit cards
• Installment: Accounts with a fixed number of payments, such as student loans
• Inquiries: The number of credit checks the applicant has had run

2. Review the Snapshot

Now that you can talk the talk, it’s time to start walking. Let’s get familiar with the tenant screening report snapshot.

The snapshot is a quick overview of the applicant. It provides you with valuable information such as:

• The potential tenant’s credit score
• Their number of criminal records
• Evictions on record
• Employment verification,
• Accounts in collection
• Public records

This section will be valuable for landlords who are seeking applicants with a specific credit score. Depending on how high or low the credit score is, the numbers will show up in red, orange, yellow, or green.

Please note that the number of employers reported may not be 100% accurate due to the lag in employment reporting to credit agencies.

As a landlord, you need to verify current employment and check references on your own. The applicant also reports their own income, which means you need to verify their income to guarantee accuracy independently. The credit report will not pull their actual income. Be sure you follow up with employment references and confirm their income on your own. Fake paystubs can also be created, so make sure you verify their authenticity. As a landlord, if you decide to deny an applicant based on information in their credit report you’ll need to follow the Fair Credit Reporting Act rules as it relates to notifying them.

3. Review Score Factors & Criminal Records

This section gives you information about the applicant’s criminal background check, including any criminal or court records on record. If the applicant does not have a criminal background, this part will read “no available data.”

You’ll also find the case number as well as the court information for each record found. You can use this information to contact the court to learn more about the criminal records, or, when applicable, you can look up the description number to find out what specific charges are on the applicant’s record.

4. Review Tradelines, Collections, & Public Records

This section is where the terminology guide becomes extremely helpful. The tradelines are accounts that the applicant has opened such as car loans, credit cards, or mortgages. The collections number reflects how many accounts they currently have in collections. The public records number includes tax liens and civil judgments (with further details provided later in the report). Negative tradelines are accounts that have missed payments. The historical numbers reflect how often the applicant’s accounts have missed payments.

The section under this provides details about each type of account, whether it is something with an installment payment plan, revolving (such as credit cards), or a mortgage. This section also informs you of how much is owed and how much is past due. You can also see the total balance owed on all accounts, the total past due amount owed, and the credit limit the applicant has left. In this case, this report shows a credit limit of $475, which is extremely low. The total past due here is $10,067, which would alert you that this applicant is in financial trouble.

5. Review Accounts, Balances, & Past Dues

Here you’ll learn more details about the trade lines, or accounts, mentioned above. This area will often include information about what company is holding the account, what type of loan it is, and what amounts are still due on each account. You are also able to see how much is past due on each account and by how long. This information can help you better understand what bills your applicant will have outside of your rental cost, which is why income verification is very important. 

Someone may have multiple trade lines with large monthly payments, but if they have the income to back this up, it isn’t necessarily a bad thing. However, if they have multiple accounts that are past due, you may be concerned about their ability to pay rent on time.

6. Review Calendar Of Payments

The next section of the screening report show you a calendar of payments, which acts as the applicant’s payment history. Green checkmarks signify when payments were made on time. Yellow, orange, and red numbers highlight the number of days payment has been late. This section will help you see how often they struggle with non-payment.

7. Review Collection Totals

This section provides information for applicants who have had accounts sent to collections. If they do not have anything in collections, this section will remain blank. In our example, you can see how many accounts are in collections, the details of how much is owed, and the credit grantor’s name.

8. Review Public Records

The next section will show you what public records are on file for the applicant. These include tax liens and civil judgments. This section will also give you details about the records and the dates they were reported.

9. Review Eviction Records

Landlords can request eviction reports along with the rest of the tenant screening. This section provides detailed information about any evictions on record. This is valuable information for landlords, as a history of evictions can be a significant red flag for applicants.

Screen Your Tenants Thoroughly

As a landlord, your goal is to find a responsible tenant who pays on time and treats your property with respect. Our goal at TurboTenant is to help you do that. Our tenant screening reports act as thorough background reports to help you effectively learn important details about an applicant. 

Remember, always abide by Fair Housing regulations throughout the application process and ensure you use standard criteria for all applicants when determining who you will accept or reject. Also, be aware, if you deny an applicant based on information in their credit report, you’ll need to follow the Fair Credit Reporting Act rules as it relates to notifying the applicant. If you are uncertain about how to best handle the rejection and acceptance portion of the screening, consult with a local attorney for advice.