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Credit reports are a standard resource for landlords to check the financial responsibility of their tenants. While they can be confusing, credit reports are very comprehensive, and can paint a very vivid picture for you. First of all, most credit reports are organized into four sections: the credit overview, the credit summary, payment history, and account history.
If you are screening tenants for your rental investment property, you can use this guide to explain what’s contained in a credit report, and why it’s important.
The credit overview is not the most in-depth part of the report but is still important. It is made up of a summary of any debts or credit lines the tenant may currently have. The overview also includes their credit score.
The credit summary is similar to the overview but consists of a breakdown of the tenant’s monthly payments and total debt. It’s also important to note that the summary includes the tenant’s total debt ratio.
As the name suggests, the credit summary “summarizes” information regarding the different types of accounts the tenant has. In this section, you can view a list of the tenant’s accounts, along with the balances, as well as the number of current and delinquent accounts under the tenant’s name.
The credit summary includes the following account types:
The payment history can tell you whether the tenant has made a late payment, or has had any debts sent to collections.
The account history is a comprehensive display of your tenant’s payments and accounts. Here, you can view up to 25 months of payment history for each of the tenant’s account.
Each account history will likely list the following information regarding the tenant:
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