A Landlord's Guide to Understanding Renter Credit Reports

Credit reports are an important piece of the puzzle when renting your property to someone, and although they shouldn’t be your only cue, they can help ensure that the renters you allow in your property are reliable. The problem is credit reports aren’t always the easiest to understand, making it hard to extract information useful for determining someone’s eligibility. 

That’s why today, we’re breaking down exactly what you can learn from a credit report section by section - in simple terms.

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Considering more than just an applicant’s credit score

First, a quick note about the weight that credit checks carry in someone’s application. 

Credit checks are useful, plain and simple. Someone’s payment history can give you an idea of how reliably they’ll pay their rent, but it’s important to remember that it’s just that: an idea. All kinds of situations can lead someone to have a less-than-stellar credit score, not all of them indicative of someone who’s unreliable. 

Plus, someone may be recovering from a poor credit score. Their recent actions, such as getting and holding down a new job or consistently making payments, might not yet be reflected in their credit score. 

This is why, for a more accurate and fair assessment of someone’s application, income streams and references need to also be closely considered. 

With that out of the way, let’s look at how to understand a credit report. 

What each section in a credit report tells you 

This is an example of a full TransUnion credit report we provide to our larger leasing professionals:

1. Basic Personal Details

This section details basic identification and contact details about the applicant, as well as when they first opened a credit account and when they last checked their score.

2. Residence(s)

This section goes more into detail about the applicant’s current and previous residences, including the address and duration of stay for each.

3. Employment(s)

This section explains the applicant’s employment status, including current and past employers, roles, and employer addresses. 

If the applicant doesn’t have an employment history (for example, they might be a student), the names of their schools may be included instead.

4. File summary

This is perhaps the most important section, as it shows the applicant’s actual credit situation. More specifically, it is the most telling of their likelihood to reliably pay rent.

The first subsection shows:

• Bankruptcies: How many times the applicant has gone bankrupt.
• Legal items: The number of debts that have become delinquent and been referred to an attorney, a collections agency, or a court for legal action.
• Collections: How many times a collector has been required to collect outstanding debt. 
• Banking closed for cause: How many times the applicant has had their account closed by a financial institution due to a specific cause or reason.
• Registered items: The number of bankruptcies, court judgments, liens, and other similar legal actions related to the applicant that have been registered with credit bureaus.
• Inquiries: The number of times the applicant has inquired about their credit score up until the current month.
• Collection inquiries: The number of inquiries made on the applicant’s credit report by collection agencies or debt collectors who are attempting to collect on a debt.
• Inquiries within 6 months
• Trade first opened: The date that a credit account or trade line was first opened by the applicant.
• Trade last opened: The most recent date that a credit account or trade line was opened by the applicant.
• Current negative trade: The number of credit accounts or trade lines currently in a negative status, such as being past due or in collections. 
• Paid trade: The number of credit accounts or trade lines currently in a positive status, meaning they’re paid in full. 
  
  

The next subsection breaks down the specific types of credit accounts held by the applicant, indicated by different letters. Here are some common types of accounts and their associated letters:

• I: Installment account, such as a car loan or mortgage.
• O: Open credit, such as a credit card or charge card.
• R: Revolving credit, such as a line of credit or home equity line of credit (HELOC).
• M: Mortgage account.
• C: Collection account, typically a debt that has been sent to a collection agency.
• F: Finance company account, such as a loan from a finance company.

For each account, you can also see:

• Count: How many of each type of account the applicant has open.
• HighCred: The highest amount of credit that has been approved.
• CredLimit: The current credit limit.
• Balance: The current balance.
• PastDue: The amount that is owed from past statements.
• Payment: How much the applicant has paid towards the current statement.
• Available: The percentage of the credit limit that is currently available. 
  
  

Finally, you can see the applicant’s High Risk Fraud Alert status (“Clear” meaning good), as well as their overall credit score (called “CreditVision Risk Score”), complete with a breakdown of the factors contributing to that score.  

Learn more about TransUnion credit reports, how they’re calculated, how to understand them, and more.

From credit checks to rental applications, automate tedious tasks and free up the time you need to choose the best applicants possible. 

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