FICO Scores and Tenant Screening

Relying upon a FICO score to make decisions about a prospective tenant for your rental property is a huge mistake. A FICO score is a man-made number that consists of an arbitrary rating as to the credit worthiness of any individual. First, it should be noted that FICO scores can be very vague and don't really tell you much information especially when it comes evaluating a rental applicant. Is it important to know the credit history of a prospective tenant? Absolutely yes! But their are far better and comprehensive ways of doing this than relying upon a just a number.

When conducing a tenant background check, it is vital that you obtain vital information from nationwide sources that include open collection accounts, evictions, judgments, liens, bankruptcies, foreclosures, address history, criminal history, and so forth. The problem is that a FICO score doesn't give you the specifics and therein lies the problem.

Take the example of an applicant who had filed bankruptcy 2 years ago. He may prove to be an excellent tenant because he is trying to rebuild his credit. And yet, his FICO score is likely to be horrible. Also consider, that a person who filed a bankruptcy recently cannot get a discharge but every 7 years. So, for landlords who rely upon FICO scores in this economy may be shooting themselves in the foot.

Another example of why FICO scores can be very misleading has to do with the inherit inaccuracies found in credit reports. We strongly recommend that you simply don't trust a credit report because we have found far too many inaccuracies. From a macro view, it is shocking to see why so many property owners have latched on to this foolish idea of thinking that they can accurate background information from anyone through just ordering a credit report. Do so at your peril!

There is actually a far superior method of researching the background history of a rental applicant and this can be done by ordering a comprehensive tenant screening report. Rather than just relying on a vague FICO score, you can get the complete history of any person dating back as far as 30 years. This includes data from every single court in the entire country for both relevant civil and criminal records. It even includes the case numbers, date, dates and subject of the court action. Additionally, these reports let you see see the complete address history along with others living at the property, real estate ownership, DMV records, professional licenses, DBA/corporate registrations, person associates and relatives and more.

Having this type of comprehensive background history can be extremely helpful if you use this data to compare with a rental application. Very often, many of underhanded applicants will attempt to hide their background history by misrepresenting their background history. These reports can help you uncover the truth and not feel like you are sitting in the dark the next time you decide to evaluate another rental applicant.