Increasingly, landlords throughout North America are screening prospective tenants in order to reduce the risks involved when renting to unknown individuals. Risks which can easily become quite costly to an unsuspecting landlord.

It's easy to prove the increasing popularity of tenant screening. See for yourself! Simply "Google" the following two words, tenant screening. Within seconds you will be flooded with a variety of small and large companies offering the service, and links to information on tenant screening. Go ahead! The last time I tried the results numbered 4,110,000.

The high number of results demonstrate that there is a rising awareness, amongst landlords, about the value of taking the necessary steps to protecting your property. The demand is growing and so is the supply.

However, although tenant screening is an important and effective tool for any landlord, there is an overwhelming trend, on the part of landlords and the service providers, to use the results of a credit check as the main reason for screening out prospective tenants. In my opinion, this is a mistake.

Of course, credit checks do provide valuable data on individuals. These reports inform us of the prospective tenant's credit history, both good and bad. But what else does an automated list of vague descriptions, and codes tell us about a potential tenant?

I dare say the answer is, not much.

Keeping aside the fact that credit reports are one-sided, and often contain errors. Credit checks can not provide any true insight on a potential tenant. For example, the credit check may lead you to think the tenant is a bad prospect, but it doesn't take into account the possibility that she went through a difficult period a few years back, but has long been "back on track".

A landlord can easily pass up a "perfect tenant", in his thirties, simply because he had trouble making payments while going through school, in his twenties. Base your decision on a credit report, and you lose a potentially ideal tenants.

What about a favorable credit report?

In my opinion, it would be a mistake for any landlord or property manager to place too much worth on a perfect credit score.

As a bad credit report can be misleading, so can a good credit report. For example, the report will not tell us that this particular individual has a reputation of constantly arguing with neighbors, and causing an all-around uncomfortable atmosphere for the landlord's other tenants.

As well, a credit report will not describe how the prospective tenant, with the perfect credit check, sitting in front of you, stuck the former landlord with an $800.00 hydro bill... Unpaid utilities often do not appear on a credit report.

Base your decision on a credit report, and you take the chance of entering into a rental agreement with a disaster.

As a landlord, it is in your best interest to exercise due diligence when considering a prospective tenant, and that means tenant screening. However, in order to truly ensure a potential tenant is the right one for you, contacting current and past landlords, employers and references is the best method.

First hand information is, and will always be better, and more revealing than any automated report.

About the author:

David Melancon owns and operates IntelMatters a research company specializing in tenant and pre-employment screening, throughout North America.

www.intelmatters.com Knowledge is the key to success!