More and more people are making the decision to run a credit check on people as a part of a decision making process. Landlords now commonly check the credit of a potential tenant before approving a rental application. Many employers are checking the credit of job applicants before making a job offer to them. No longer are credit checks only being done when you apply for a loan or credit card.

So what information can you learn by reviewing a person’s credit ratings report? Essentially, when you know how to check credit score and rating on an individual, you can get a snapshot of their financial history. You can also learn more about their current financial situation, too. With free credit ratings, you can learn if a person has or had tax liens, property liens, debt settlements, and bankruptcies. This information shows if an individual has been responsible by paying financial obligations as agreed.

A credit ratings report also can indicate if a person is currently under financial stress. Late payments for mortgages, auto loans, credit cards, and other debts are reflected on the report. You can use free credit ratings to learn if a person is currently making late payments or has a history of making payments late. You can also compare credit limits to outstanding balances to learn if a person is maxed out on their available credit.

It should be noted that reading a credit report should be done with care, and oftentimes explanations may be in order. For instance, you may find medical collection accounts from a few years ago listed on a credit report, but the rest of the credit history is clear. An explanation from the individual may reveal that the person or someone in their family required significant medical care at a time. This does not indicate irresponsibility with finances necessarily.

After learning about the importance of reviewing a credit report for potential tenants, potential employees, and others, often the next question is how to check credit score and history on an individual. First, written authorization to pull an individual’s credit report is required. With that authorization, you can pull a report online. However, for individuals or companies that have a regular or recurring need to check credit on different individuals, purchasing credit report software may be a smart move. This software allows you to pull credit reports on your computer in a cost effective way.

Checking a credit report before making a big decision such as hiring a new employee or leasing a space to a tenant is a wise move. This is a fast and easy way for you to more fully know who you are dealing with. It can help you to steer clear of making a made decision, or it can reaffirm that a decision is a sound one.