A credit check is one of the most common, and most regulated, steps in renting out a property. The moment you pull a credit report on a rental applicant, federal law treats you as a user of consumer report information, with real obligations about why you pull it, how you use it, what you tell an applicant you turn down, and how you throw it away. This guide walks through the process of running a credit check for renters from start to finish, so the report you get is useful and the way you handle it holds up.
Note: This article is general education, not legal advice. Screening, application fee and consumer reporting rules vary by state and municipality and change over time. Confirm the current requirements where your property is located, and talk to a local attorney about your specific situation.
The Tenant Screening Hub covers every stage of screening; this article covers the credit check itself. For deciding what score to accept, see our guide on what counts as a good credit score for renting.
Step 1: Confirm your permissible purpose and get written authorization
The Fair Credit Reporting Act (FCRA) limits who can obtain a consumer report and why. According to the Federal Trade Commission's guidance for landlords, you may obtain consumer reports on applicants and tenants who apply to rent housing or renew a lease, and you must certify to the company supplying the report that you will use it only for housing purposes. That certification is your permissible purpose. Pulling a report for anything else falls outside it.
Even so, collect signed written authorization from every adult applicant before you order anything. It documents that the applicant knew a report would be pulled, and screening companies commonly require it. Some states and cities also add their own disclosure or consent rules, so check local requirements.
Step 2: Choose a consumer reporting agency
Small landlords generally do not buy credit reports directly from the national credit bureaus. They work through a tenant screening company, which is itself a consumer reporting agency under the FCRA, or through a property management platform that partners with one.
When comparing providers, look at:
- Which reports are available (credit, criminal, eviction, judgments) and whether you can order them separately
- Whether the credit report includes a score, and which scoring model it uses
- Whether the applicant or the landlord pays
Ask each provider to walk you through a sample report before you commit, so you know exactly what you will be reading.
Step 3: Understand soft and hard inquiries
Applicants often worry that a rental credit check will hurt their score. Per the Consumer Financial Protection Bureau, hard inquiries can affect a credit score because most scoring models look at how recently and how frequently someone applies for credit, while soft inquiries do not affect credit scores and are visible only to the consumer.
How a tenant screening pull is recorded depends on the provider and the product. Many tenant screening products are designed to register as soft inquiries, but this is not universal. Ask your provider how its pull appears on the applicant's file, and tell applicants the answer up front.
Step 4: Decide who pays, and check fee limits
Many landlords pass screening costs to applicants through a fee. That is legal in many places, but some states cap or restrict it. Two examples:
- New York: Under New York Real Property Law section 238-a, a landlord may not charge an application processing fee, but may charge for background and credit checks up to $20 or the actual cost, whichever is less. The fee must be waived if the applicant provides a background check conducted within the past 30 days, and the landlord must give the applicant a copy of the check and the receipt or invoice from the company that ran it.
- California: Under California Civil Code section 1950.6, screening fees are capped at an amount adjusted annually for inflation, may cover only actual out-of-pocket screening costs and the reasonable value of time spent processing the application, and an itemized accounting must be provided on request. Recent amendments also tie the fee to whether the application is actually reviewed, with refund obligations when it is not.
Other states and cities have their own caps, refund rules or portable screening report requirements. The FTC has also focused on rental fees more generally, which we cover in our article on the FTC rental junk fees rule. The safe habit is to charge no more than the real cost of the reports, disclose the fee up front, and avoid collecting fees from applicants you will never consider.
Step 5: Know what is on a credit report
According to the CFPB, a credit report typically contains five categories of information:
- Personal information: names used, current and past addresses, date of birth and Social Security number
- Credit accounts: current and historical accounts such as mortgages, auto loans and credit cards, with balances, payment history, and open and close dates
- Collection items: missed payments and debts sent to collections
- Public records: items such as bankruptcies, and in some cases liens, foreclosures or civil judgments
- Inquiries: companies that have accessed the report
A credit score, if included, summarizes that data; the report itself tells you why the score is what it is.
Step 6: Read the report against the rental decision
Read the report with one question in mind: does this history suggest the applicant will pay rent on time? A few habits help:
- Match the identity first. Confirm the name, address history and other identifiers line up with the application. A mismatch can mean a data error or a fraud attempt.
- Weigh recent patterns over old events. Several recent delinquencies say more than one late payment years ago.
- Check for prior housing debt. Collections from a previous landlord or utility company are directly relevant.
- Note thin files. A young applicant or someone new to credit may have little history. A thin file is not the same as a bad file.
Credit is one input, not the whole decision. Pair it with income, rental history and the other reports covered in our tenant background check guide, and use the complete tenant screening checklist to make sure nothing is skipped.
Step 7: Apply consistent written criteria
Before you list the unit, write down your screening criteria: minimum credit score or credit standards, rent-to-income ratio, how you treat bankruptcies and collections, and what conditions (such as a cosigner or larger deposit, where allowed) might apply to a borderline applicant. Then apply the same criteria to every applicant for that unit, in the order applications are received.
Written criteria give you a record that every applicant was evaluated the same way, which matters for fair housing. Credit standards must be applied evenly and should not be used as a proxy for a protected characteristic. Our fair housing compliance guide covers this in more detail.
Step 8: Send adverse action notices when required
If information in a consumer report leads you to take an adverse action, the FCRA requires you to tell the applicant. The FTC defines adverse action broadly as any action unfavorable to the applicant, including denying the application, requiring a cosigner, requiring a deposit that another applicant would not have to pay, requiring a larger deposit, or charging higher rent.
Per the FTC, the adverse action notice must include:
- The name, address and phone number of the consumer reporting agency that supplied the report
- A statement that the agency did not make the decision
- Notice of the applicant's right to dispute the accuracy or completeness of the report
- Notice of the applicant's right to a free copy of the report from the agency if requested within 60 days
If a credit score played a role in the decision, the FTC says the notice must also disclose the score, its source, the date it was created, the range of possible scores, and the key factors that adversely affected it, listed in order of importance. The FTC notes that oral notices are permitted, but written notices are the best practice. Keep a copy in the applicant file. If an applicant disputes the report, our guide on how renters dispute a tenant screening report explains what happens next.
Step 9: Protect and dispose of the report
A credit report is highly sensitive. Store it in a secure system rather than an email inbox or a shared folder, limit access to the people who actually make the rental decision, and do not reuse it for any other purpose.
When you no longer need it, dispose of it properly. Under the FTC's Disposal Rule (16 CFR Part 682), anyone who possesses consumer information for a business purpose must take reasonable measures to protect against unauthorized access when disposing of it. The FTC's landlord guidance gives examples such as burning, pulverizing or shredding paper documents and disposing of electronic files so they cannot be read or reconstructed. Set a retention period that accounts for state record-keeping rules and potential fair housing claims, then follow it consistently.
Frequently asked questions
Do landlords need written permission to run a credit check on a renter?
A rental application can establish the permissible purpose under the FCRA, but landlords should still collect signed written authorization from every adult applicant. Screening companies commonly require it, and some states add their own consent rules.
Does a rental credit check hurt the applicant's credit score?
It depends on whether the screening provider records the pull as a soft or hard inquiry. Soft inquiries do not affect credit scores, so ask your provider how its report appears and tell applicants before they apply.
How much can a landlord charge for a credit check?
It depends on the state. New York caps background and credit check fees at $20 or actual cost, whichever is less, while California sets an inflation-adjusted cap tied to actual costs, so check your local law before setting a fee.
What must a landlord do after denying a renter because of credit?
The FCRA requires an adverse action notice that names the consumer reporting agency, states the agency did not make the decision, and explains the applicant's rights to dispute the report and get a free copy within 60 days. If a credit score was used, the score and its key factors must also be disclosed.
What to do next
Running a credit check correctly is less about the report and more about the process around it: getting authorization, ordering through a legitimate reporting agency, charging a fee your state allows, applying the same written criteria to every applicant, and documenting each decision. Handled through scattered emails and paper files, criteria drift and records go missing.
Shuk brings that process into one place. Tenant screening through a screening partner lets you order a credit report ($10) along with criminal, eviction, and judgments and liens reports, all paid by the applicant. You set your pass criteria in advance, including minimum credit score, rent-to-income ratio and whether to allow bankruptcies or evictions, so every applicant is measured against the same standards. You can request supporting documents such as photo ID and proof of income. Shuk does not auto-approve or deny anyone; you make the decision, and when you decline an applicant, the rejection reasons you select are disclosed to the renter. Once you approve someone, e-signature for leases and centralized in-app messaging keep the next steps organized.
At as low as $2 per unit per month, with no setup fees and no contract, and with White Glove Onboarding included at no additional cost, Shuk makes a consistent, documented credit screening process feasible for landlords and property managers running 1 to 100 units.
Book a demo at shukrentals.com/book-a-demo to see how tenant screening, landlord-set pass criteria and e-signature work together so every applicant is evaluated the same way and every decision is easy to explain.
