How do you screen a tenant with no credit history? Learn how to proceed with this tutorial on tenant credit history.
When we say someone lacks a credit history, it either means he has no Fico Score or no record was found.
What No Fico Score Means: The tenant had no credit activity reported to the credit bureaus (Equifax, Experian, TransUnion) in the past 6 months. In other words, the tenant didn't touch any credit cards, loans or mortgages in the last 6 months (or at least one that reports to credit bureaus).
So a tenant with no Fico score isn't necessarily a bad thing - It just indicates that he wasn't involved in (reported) credit or debts recently.
What No Record Found Means: Incorrect tenant information was submitted OR The tenant hasn't established a credit record yet.
Incorrect tenant information submitted: Were there any typos or missing information when you were applying for your tenant credit reports? It's also possible that your tenant provided you with incorrect personal particulars (by accident or on purpose).
Tenant hasn't established a credit record: Young renters and new immigrants often fall into this category. Most of the time it's because they don't have any personal income yet (e.g. students) or they haven't incurred any debts yet.
Let's get something out of the way first: Zero credit history is better than bad credit history. Even if someone has no tenant credit history, there are still other effective ways to screen him or her.
Ask your tenant applicants for their previous rental records: three previous addresses, the rental dates and contact details of former landlords.
As a rule of thumb, you would want someone who has stayed at least for a year at each of the previous addresses (longer is better). You should also call or email at least 2 former landlords to ask for their references.
Request for their employment records as well. Useful information includes: current salary, (previous + current) work addresses and (previous + current) duration of employment. What you hope to see is someone who has worked at least 6 months at his or her current job and draws a salary that is at least 3 times higher than your asking rent.
If your prospective tenants are willing, you can also ask them for your bank account statements. He should have at least enough money in the bank for at least 2 months of rent (6 months would be ideal).
My Tip for Tenant Credit Checks Not rated yet
Some potential renters are highly concerned with any negative and false information that may show up when you run a landlord tenant credit check on them. …