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Common Questions Regarding Credit Checks for Renewal Tenants

  Sue McConnachie   |     Mar 07, 2019

In this blog, Quality Credit Reporting (QCR) takes a look at some of the most common questions we receive in regards to credit checks for renewal tenants and lists them for your benefit here:

What could have changed since the original lease executed?

  • The full legal corporate name due to an amendment or amalgamation.
  • Corporate Provincial status.
  • The jurisdiction in which a corporation is registered to do business.
  • Default with Companies Branch and Corporate Tax Branch.
  • Increased debt (including mortgages, lines of credit, term loans and credit cards).
  • Decreased bank account balances.
  • Delinquent activity (late payments, collection claims, legal actions, judgments or bankruptcy).

My tenant has an option to renew, is there still a need for the report?

Although your tenant may have an option to renew, assessing your risk for a further term still makes sense. The more you know about the tenant the better. If the tenant is exercising the option to renew, a report could assist during the course of the lease should the tenant run into financial difficulties.

You could be alerted at the time of renewal regarding possible problems and this knowledge will help make decisions when considering leasehold improvements and other issues. Further, you may opt to terminate if the lease is contingent on some element of default. The report will help you decide if you want to renew based upon the current credit information and the nature and extent of default.

Our tenant does not want to complete a new credit application, so what now?

Your commercial tenant is not required to complete a new application and does not need to know that you are doing a credit report. You can obtain all the information you require to re-assess the tenant without a potentially uncomfortable situation.

Our original application completed by the tenant includes a clause which authorizes Quality Credit Reporting to gather subsequent credit data through the duration of the lease. If QCR did not complete the initial report for the tenant when they were prospective, still no problem. We can gather significant information without a new application.

The tenant has not missed any payments, why do I need to do a report?

Just because your tenant has paid on time each month does not mean that they are not a future risk. When a business is struggling financially, the first payment made each month is the rent, as risking the primary place of business would probably mean the business is shutting down.

The landlord gets paid as it is the tenant’s priority! What you need to consider is what other payments they are not making and if there are pending law suits, judgments, collections or unpaid taxes. Receivables do contribute to the overall picture; however, they are not the only consideration.

If you have any further questions, please do not hestitate to get in touch with QCR's team of experts who would be more than happy to help. 

Download the Guide to Commercial Tenant Reports 

By Sue McConnachie

Quality Credit Reporting is North America’s premiere credit reporting agency, committed to providing unparalleled, high-quality reports and services.

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