Some state laws allow the landlord to charge a prospective tenant for the cost of ordering a credit or background check. Other states require that landlords cover the cost. Either way, it’s a good idea to pull a tenant’s credit. A credit check will show you details about the tenant’s previous credit history, going back 7 to 10 years. You can order a credit report and credit score using the Equifax Identity Report.
Consider the following when you review the credit report:
Credit History. Look for a history of late payments, collection accounts, charged off credit card accounts or major issues such as bankruptcy. While one or two late payments in the past does not necessarily imply a bad tenant, you may want to reconsider taking on someone with serious delinquencies, such as bankruptcy.
Current Debt. If the tenant has maxed out all of his credit cards, carried hefty loans, or has several unpaid balances, he may struggle to keep up with the rent payment.