How To Credit Check A Tenant In Canada In 7 Steps
As a landlord in Canada, it’s important to thoroughly credit check your potential tenants before signing a lease agreement. Not only is it a good way to ensure you’re getting reliable and responsible renters, but it can also help protect your property and finances. A credit check is a small price to pay for the nightmare it would save you. Plus, it is tax deductible.
If you don’t know the worthiness of your potential tenant or want to validate your assumptions, here are the steps to follow to credit check a tenant in Canada:
1. Collect Basic Information From The Tenant
Before you can run a credit check, you’ll need some basic information from the tenant, such as their full name, date of birth, and current address. You may also want to ask for a copy of their driver’s license or passport to verify their identity.
2. Obtain Written Consent
It’s important to obtain written consent from the tenant before running a credit check. This can be as simple as having them sign a consent form or include a clause in the lease agreement.
3. Choose A Credit Reporting Agency
There are several credit reporting agencies in Canada, such as Equifax and TransUnion, that you can use to run a credit check on a potential tenant. It’s a good idea to choose one that is reputable and has a proven track record of accuracy.
4. Order The Credit Report
This one isn’t rocket science. Once you have the necessary information and written consent, you can order a credit report from the credit reporting agency you’ve chosen. This will typically involve filling out an online form or contacting the agency directly.
5. Review The Credit Report
Once you receive the credit report, take some time to review it carefully. Look for any red flags, such as a history of late payments, high balances, or bankruptcies. Keep in mind that a low credit score doesn’t necessarily mean the tenant is a poor choice, but it’s important to consider all of the information on the report when making your decision. A good credit score (above 650) is a good qualifier.
6. Check References
In addition to running a credit check, it’s also a good idea to check references from previous landlords or employers. This can give you a sense of the tenant’s reliability and responsibility.
7. Make A Decision
Based on the information you’ve gathered from the credit check and reference checks, you can make an informed decision about whether or not to rent to the tenant. If you do decide to move forward with the tenant, it’s a good idea to include clauses in the lease agreement that outline expectations for timely rent payments and other responsibilities.
By following this 7-step guide, you can effectively credit check a tenant in Canada and make a well-informed decision about whether or not to rent to them. Remember to always obtain written consent before running a credit check, choose a reputable credit reporting agency, and review all of the information you gather carefully. This will help ensure that you find reliable and responsible tenants who will take good care of your property.