Did You Notice Changes to Your Credit Report?

Credit reports are very important screening tools and according to the Associated Press, starting July 1, 2022, they are changing a bit. All three major credit reporting agencies will no longer count paid medical bills on reports that are used to consider creditworthiness by landlords. The credit reporting agencies will also expand the timeframe consumers have to resolve medical dept that is delinquent prior to reporting from 6 months to a year. Including with this change you will see less medical debt on credit reports all together as the reporting agencies will also stop counting unpaid medical debt if it is under $500. The decision to remove this type of debt when considering a person for rental housing comes as a part of a large debate to see if medical debt should be reported on credit reports at all.

So, how important is a credit report? Is it more important than a criminal background check or a rental verification? What about an employment verification? Is it more important than any of the other investigations that can be found in a consumer report that is used for applicant screening? I believe that one type of report is not necessarily more important than another. They all provide you with different types of information that are ALL necessary to make an informed decision when it comes to selecting an applicant.

When you decide to run applicant screening on your prospective tenants you are looking for lots of different information. All this information is not found in one location. It may seem that way because when you order your applicant screening report from RHAWA we are able to wrap it all in one nice, complete, easy to read report for you to receive. However, the criminal records are pulled from a criminal records data base, evictions records from a statewide eviction records data base. Your applicant’s credit report and credit information come from the credit bureaus – if you use RHAWA it comes from TransUnion. Rental history comes from the previous or current rental property owner, manager, or leasing agent. Employment and Income information is obtained from either an individual’s supervisor, HR department and in some cases, it comes from an online data provider.

All this information is important and serves its own purpose when investigating an application. Criminal and eviction background information can help you learn more about an individual’s character or lifestyle and choices that they make. Are they responsible and respectful citizens? Obtaining rental history is extremely useful in helping determine what type of tenant they might be – will they pay their rent on time and take care of your rental property? Of course, verifying one’s employment can give you an idea of whether they have steady income. What does a credit report tell you? A credit report can help you determine a person’s financial responsibility. You may not feel you necessarily need to require flawless credit, but you probably want to make sure that they are conscientious when it comes to repaying their debt. A credit report can tell you how much debt an individual has, what their monthly financial obligation is for repaying that debt ie: loans and credit cards. It can also tell you if they have fallen behind and when. This information is necessary in determining the debt-to-income ratio to make sure they can afford to pay you rent. So yes, a credit report is equally as important as the rest of the information used to conduct a tenant screening.

Don’t let the federally required certification process deter you from having access to this important information. RHAWA can help you with this process so that we can provide you with a complete and thorough consumer report that will meet your applicant screening needs. The certification process is first so don’t wait until you have an application in hand that you need to screen, contact us today! (206) 283-0816 or screening@RHAwa.org.