What to do with applicants with no credit record
August 1, 2009
You get the credit bureau report back on your applicant, and the bureau never heard of him. That will make you think, won’t it? Of course, you immediately think the worst. There could be several reasons that the credit bureau couldn’t find a record, though.
First, and most obvious that comes to mind, is that your applicant is lying to you and trying to hide what he knows you will find if you pull the report that really does exist, if you plug in the correct information.
Second, it could be that he simply has no credit established anywhere. It’s hard to believe that in this society anybody could have slipped through the omnipresent electronic net, but it does happen every so often. That could be a legitimate explanation particularly with young people.
Third, he simply may not be in that particular credit bureau’s files. There are three major credit reporting bureaus in the United States. Make sure you get a report that searches all three.
You can find out why your applicant has no record.
To begin with, verify the social security number with the applicant. This could be as simple as having the applicant repeat it for you. Possibly he or you transposed some numbers. You may want to look at the card yourself to be sure the number is correct.
If you applicant can’t verify his social security number, run up the red flag. Something is going on, it isn’t good, and you don’t want to be in the middle of it.
Second, if the number is correct, look at the rental application. What types of credit does the applicant indicate he has—credit cards, car loans, student loans? If the space for types of credit is blank, be sure that the blank lines are because there is no credit, rather than a lie by omission.
Remember, though, someone with credit cards will have a credit record, period, end of story. So if the application says he has a credit card and the social security number verifies run the red flag all the way to the top of the pole.
Third, if your applicant says he has no credit, look at reasons why that may be. As I mentioned earlier, it could be simply because he is too young to have established any. And occasionally you run into people who proudly pay cash for everything.
You can and may deny an applicant because you cannot find a credit record, as long as you include that on your rental policies and standards. Language such as: “If we cannot verify previous landlords and addresses, employment or any statement, including your credit history, on your application, it will be rejected.”