If you are considering seller financing the sale of your real estate or business, you should obtain a credit report on your prospective buyer.
Without factual knowledge of your buyer's credit standing, you cannot make an informed judgment about accepting or rejecting your buyer's offer. After all, you will create a note that extends a large amount of credit to your buyer. No bank or mortgage company would extend similar credit without a credit check.
Don't be reluctant to ask for a buyer's credit report for fear of seeming rude or untrusting. If there are problems, the time to find out is before you accept the buyer's offer. If you neglect this step and later discover problems with your buyer's credit, you may not be able to get a good price for your note if you ever need to sell it for cash.
The easiest way to obtain a credit report on your buyer is to ask the buyer to obtain their own credit report and then furnish you a copy. Credit reporting bureaus will not send your buyer's credit report to you because of privacy laws. However, for a small fee, they will send your buyer's credit report to the buyer.
Here is what to ask your buyer to do: First, they should contact one of the following national credit reporting bureaus:
- Trans Union
Then, have the buyer ask for his or her own credit report. Last, ask the buyer to give you a copy.
If the buyer refuses to provide a credit report, refuse to sell. No credit report, no sale.