A credit check is the process by which a prospective lender decides to see if the person to whom he is lending is noteworthy or not. It is conducted when someone, usually a lender, checks the credit report of a person to determine if he or she can be trusted for the credit. A credit report is like the financial footprint, which is exclusive to the individual credit user. A lender can decide the credit risk by looking at the way you have been handling your credit risk in the past. A credit report will entail a detailed analysis from the bureau of credit reporting. The report will have all the details like social security number, date of birth, current address, employment history and many other things. Knowing how to run a credit check can be safe for you as a lender.
Identification
A credit report can be made for every customer the minute that person creates his or her first bill and it continues until the financial demise of the person. Your credit report and everything mentioned under that will introduce you to the lender. There is no way that lender can know all the customers, and so the credit report is used, which will stand as your first impression. It will have all your personal information along with the payment history you have had so far from the public records.
Significance
It is true that the lender will consider your full credit history when they start performing the credit check and during this, your FICO score will carry the maximum weight. The FICO score is a three digit number, which can range from anywhere between 300 to 850. The higher score you have the lower risk you will face in credit check and it is vice versa for the lower score. If your credit check shows that you will be unable to pay the debt, the charge card and the loan will be rejected.
Misconceptions
Lenders are not the only people who can carry out a complete credit check on you. Even employers and prospective landlords can run the credit check on you. The creditworthiness you have can be of interest to the landlord for many obvious reasons. He has to be sure that you will pay the rent, he wants to know that you will make enough money to pay the same, and he may be interested in knowing the number of past dwellings you have had. Even if you are not paying the prospective employer, the employer is concerned to know what kind of character you have. If they consider that you have a bad credit risk through the lens of the lender, then they will view you as a risk for working in their organization.
Warning
If ever you have been denied credit card and you are worried that something has gone wrong in your credit report, then you must immediately check your credit report. You have the complete right to view your credit report annually and that too for free. For checking the discrepancies you will have to request a copy from the three main credit reporting agencies, like TransUnion, Experian and Equifax.
Features
As mentioned by the Fair Isaac Corporation, if you have a credit score, which falls from 720 to 850 then you are considered as credit worthy. Most of the consumers will fall in the category of 600 to 800.
Here are some simple steps to run a credit check.
Things Required:
- Financial calculator
- Credit reports
- Rental applications
- Notebooks
- Personal organizer
- Writing pens
Steps:
- First, you will have to make an online credit check account with the credit check service. There are many such websites, and they will charge you some amount as their fees for checking the credit history. In most of the online services, the fee will range from 14 to 35 dollars, depending on the company you choose for performing the check. However, if you do not wish to pay the fees, then there is a site known as ClearScreening, which will perform the check for free. Once you find the right company for performing the check sign up and create an account.
- Ask your renter to fill out this application form with all his or her information. You will need all this information for completing the credit check. The information that you will need from your renter will be, full name, last two addresses and the duration of stay at that place, social security number and birth date. Ask the renter to sign the agreement form, which will state that he or she has no problem in performing a credit check. You will use this information at the company from where you wish to get the credit report.
- If you want then you can charge the renter for an application fee. This is how you can pay the fees to the credit check company every time you perform a check. Most of the landlords will charge this fee, so it is expected for you to do the same, but you must inform the renter that you will be charging a fee. A normal application fee will be not more then 25 dollars.
- Now, login on the account that you have created and enter all the information on the credit checker. You will have to enter all the details that you have got from your renter. Once the credit checker is done checking, you will get a report, which will let you determine whether or not your renter has been qualified to rent a place from you. Now you know about running a credit check so go ahead and check the potential renter before renting the place.
Tips and Warnings:
- The history of the prospective tenant is a good sign of his or her future ability for assuming the financial responsibility.
- Always remember that you must avoid discrimination by choosing the applicants based on the financial history instead of their gender, race or any other discriminatory factors.
Related Tags: how to become a credit check company, What information is needed to run a background/ credit check, what information is required to run credit report
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