Conducting a credit check
Landlords should have a methodical process for selecting tenants. Choosing the best tenant includes checking their credit history, which can be done easily as long as you get the prospective tenant’s permission first.
How to conduct a credit check
1. Get consent
- Ask your prospective tenant to fill out a Pre-tenancy application form. This form asks them to consent to a check of referees and credit.
- Work through the form with the tenant to make sure all the details are correct, including spelling of names and personal details such as date of birth. These are critical for getting a credit check for the right person.
When you collect personal information about a prospective tenant you need to be aware of your obligations under the Privacy Act. For more information see www.dbh.govt.nz/attracting-tenants.
2. Choose a credit check agency
- You can do an internet search to find a listing of credit checking agencies.
- You will need to become a subscriber with a credit checking agency in order to be able to obtain a tenant’s credit report. The cost to do this varies so check with each agency to see what their costs are and what services they include.
Note: members of a local Property Investors Association (PIA) often receive a discounted rate with a credit checking agency as part of their PIA membership package.
Some landlords may consider the cost of a subscription to be too high if they’re only carrying out a few credit checks each year. In these cases, a landlord may instead ask the prospective tenant to request a copy of their own credit report and reimburse them the cost for doing so (once they’ve given a copy of the report to the landlord).
3. Request the report
- You can usually get checks via the agency’s website, or from the agency’s call centre service (which may be an 0800 number or an 0900 number). You may need a credit card.
- Make sure you have a copy of the Pre-tenancy application form handy; credit checking agencies need to be satisfied that you’ve obtained the tenant’s permission before they’ll release a copy of the tenant’s credit report to you.
- After you log in to the agency website, enter the requested details of the prospective tenant. A few minutes later you should receive the credit report. Some agencies will fax or mail you a report .
What credit check reports contain
Reports will generally have the following information:
- The prospective tenant’s full name and date of birth, and any known aliases. Some reports also note occupation and employer.
- Information from the last five years or more on the person’s involvement in: payment defaults, collection actions, court judgments, bankruptcies or other public notices
- Other recent addresses
- Cross-references to other credit enquiries made against the prospective tenant
- A credit rating for the person.
Using information in the report
Credit reports give you further information to support your personal judgment of a prospective tenant.
If you enter into a tenancy agreement after receiving a credit report, keep a copy of the credit report because the tenant can ask to see it under privacy legislation.
Most people will have some data recorded against their name in a credit report. If a report has little or no data this could mean the person is either very new to the country or perhaps has other identities that have not yet been tracked.