Tenant Credit Score Like Wine and Cheese

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Let’s say you have an applicant willing to pay full ask price for your rental listing.  To increase the likelihood of getting paid and to avoid problems, you want a tenant credit score.   But which one should you order?

Tenant Credit Score

A tenant credit score will evaluate your applicant’s ability to pay.  But ordering a tenant credit score can be confusing.  A report by the Consumer Financial Protection Bureau found consumers puzzled.  Consumers understood there were multiple credit scores available but unclear of the differences.  Allow me to clarify the choices.

Tenant Credit Score Types

FICO Score

FICO, Fair Issac and Company, is the most familiar score.  A FICO Score is based on the credit files of the three national credit bureaus:  Transunion, Experian and Equifax.  FICO is the standard and used by more than 90% of lenders.

VantageScore

VantageScore was created by the three national credit bureaus.  VantageScore uses a different scoring model than FICO.  It can benefit consumers with a negative history recently improved.  VantageScore controls the remaining 10% of the market used by lenders.

Credit Check

Credit check, credit risk, credit decision, credit summary or credit evaluations use algorithms and may include a pass/fail recommendation.  Unregulated, they can use any scoring criteria.  Scores may differ by 10 – 20% from a FICO Score.  That’s quite a difference.  A 750 FICO Score is considered excellent credit.  Yet a 600 Score is considered poor credit.

These products do not include credit data.  The names of the trade line accounts and their balances, separate past due amounts for each account, dates reported, accounts in collection, delinquencies or the number of days late are not included.  Just an estimate of credit risk is provided.  When ordering these reports from online sites,  60% of consumers thought they had received a FICO score, according to a survey by BAV Consulting.

Tenant Credit Report

Comprehensive Tenant Credit Report

A comprehensive tenant credit report supplied by Transunion, Experian or Equifax provides the most information.  Comprehensive tenant credit reports include detailed credit data of the applicant’s credit history.  Credit checks do not.  It’s a big difference.  Viewing the complete credit history may provide a much different picture of the applicant’s ability to make your rental or maintenance payment.  The credit data may portray the applicant’s financial picture more favorably or less favorably than a simple credit check.  Comprehensive tenant credit reports provide more information for a more informed decision.  Full credit reports can include a FICO Score or a VantageScore.

To view an applicant’s full credit history, the credit bureaus require a site inspection and credentialing.  It’s a simple process administered by tenant screening agencies.  Property managers, landlords or associations which meet the credentialing requirements and a site inspection, can receive full tenant credit reports with a score.

Transunion Smartmove

For those who cannot pass or decline the completion of a site inspection, there is Transunion Smartmove.  Transunion Smartmove provides a comprehensive credit report with a specific ordering process.  First, the landlord sets up an account and enters the applicant’s information including a required email address.  Then the applicant completes the application, authorizing the landlord’s request to view the report.  This option places more responsibility on the landlord.  And the timing is in the hands of the applicant.

Tenant Bankruptcies, Liens & Judgments Search

Property managers, landlords or associations seeking to forgo a site inspection or those that cannot pass the site inspection, can search for an applicant’s Bankruptcies, Liens & Judgments.  These reports will not include detailed credit data or a FICO Score but will report negative financial issues.

Ordering a Tenant Credit Score

A tenant credit report and a tenant credit score are different but marketing has blurred the distinctions.

When ordering a tenant credit report, make sure it includes a credit score – either a FICO Score or VantageScore. It’s best to get both the report and score.

 

Tenant Credit Check and Score Image

Tenant credit reports and credit scores, like wine and cheese.  They go together.

 

Applycheck provides comprehensive tenant credit reports with a FICO Score; Bankruptcies, Liens & Judgment reports and Transunion Smartmove to accommodate your needs.

 

Cliff Lamm

Cliff Lamm

Cliff is the Founder of Applycheck.He has worked in real estate as a licensed broker, builder and investor. He shares his passion for real estate and technology with every client.
Cliff Lamm

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2017-08-15T09:02:13+00:00