How a Landlord Reports to a Credit Bureau
Landlords need to screen tenants to limit the amount of trouble and financial strain they will encounter once a tenant takes up residence in their building. They have many factors to consider when screening—credit being a major aspect. Tenants are often uneasy when a landlord does a background check because they worry about their credit scores. While tenants can supply their potential landlords with credit data, landlords will also do a credit check by requesting information from credit bureaus.
What Do Credit Bureaus Do?
A credit bureau collects and updates credit information on individuals. This includes:
- repayment history
- the amount of credit available
- the amount of credit currently in use
- outstanding debt
- public record details (bankruptcy, foreclosure, repossession)
Credit bureaus also have an individual’s personal information, such as their address, previous and current employers, and salary information. A credit bureau’s sources consist of a variety of businesses that provide consumer information, resulting in variations depending on the credit bureau you choose. Credit scores are sometimes erroneously calculated, for instance, when two individuals have similar personal information, but this can be disputed.
Many landlords run credit checks to verify and confirm the information tenants have supplied them because there is the chance that high-risk tenants have provided false or misleading information in order to be accepted for lodgings. Businesses also get in touch with credit bureaus to evaluate whether or not they should work with individuals. Other parties who request data from credit bureaus for evaluations are employers, insurance companies, and debt collectors.
The Landlord Credit Bureau in Canada and the United States have simplified the reporting process for landlords and property owners. Through the websites, they are able to report tenants’ overall behaviour and when tenants are late with the rent all while having access to tenants’ records whenever they choose to change lodgings. This way, every landlord can see a tenant’s history and know which tenants are high-risk, low-risk, or in a transitional phase.
With this reporting tool, good tenants benefit because landlords are able to distinguish those who are responsible from those who try to ignore their lease agreement. Tenants are able to monitor their account and provide reasons as to why their rent is late—if they pay an annual membership fee.
Landlords need tenants’ rent to pay their own mortgages, so when tenants damage property and neglect their payments, landlords suffer serious financial impacts.
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